ANF: SHORT
My quest is to find shorts where the recession isn’t priced yet. Obviously, the “short homebuilders and Fins” trade was better last year. There may still be downside, but I want the uncovered plays.
One uncovered play is (ANF: 44.67 0.00%).
Retailers have sucked for some time, but I think that there is a supposition that teens are recession proof. Why else is ANF holding up?
If we are going into a consumer-led recession, ask yourself, will ANF have a better two years going forward, or worse? I’m trying not to “over think” this.
It looks like it is rolling over and unless this piece of retail garbage starts quietly selling fertilizer and becomes a nascent “Ag play” it should be a pretty straightforward short.
To me there is a divergence between the PPS and revenue growth. Also, viz. the way ANF traded the last recession.
Lastly, this stock has held up remarkably well within the group––It ranks in the top 25% percentile for the Specialty Retail group. Looking at that illustrious 75th percentile of Specialty Retailers, here are the % from the 52 week high, which for most of these was sometime between Oct - Dec 2007.
(BKE: 35.91 0.00%) - 5% off high (top in industry)
(ROST: 52.15 0.00%) - 8% off high
(URBN: 36.14 0.00%) - 10% off high
(GYMB: 52.18 0.00%) - 14% off high
(ANF: 44.67 0.00%) - 19% off high
(JCG: 45.02 0.00%) - 26% off high
(TIF: 47.58 0.00%) - 39% off high
(JWN: 40.26 0.00%) - 40% off high
(NILE: 54.01 0.00%) - 55% off high
Legend:
Top Pane:
Red Bar = Down and on volume > 50-day avg volume
Green Bar = Up and on volume > 50 day avg volume
White bar = +/- % change on <= 50 day avg volume
Red Indicator = highlight when 10 wk MA crossing though 50 wk MA (equal to 50-day X through the 200-day) AKA “death cross”
Pink Indicator = highlight when 50 wk MA moving down “slowly”
Second Pane:
Short Interest and 21 week MA of SI. You can see it is increasing, though still low at 4
Third Pane:
Revenue Growth over the last four quarters is declining. Be sure and notice the relationship b/w growth and share price. Also notice how share price advanced in 2004 - 2006 when Rev growth regained the 21 wk MA. The same relationships drawn between price and different MAs can be be carried over to other indicators, such as short interest and revenue growth, for instance.
URBN Earning trends over time (pane three has commentary)
ANF Earnings Trends in the same panel
what about URBN?? it’s still actually uptrending, and only about 10% off its highs. I know people love this stock, and it recently tried to break to all time highs and has pulled back some. But it is trading at roughly twice the valuation of ANF, with a similar market cap, and only slightly larger projected growth rate… i don’t really see them not getting hurt if ANF and others do…
salient points. I agree. I actually had urbn up there but between writing and posting I must have accidentally deleted it.
updated
What do you think about LULU?
thanks
Lower highs and lower lows, I would say sell it.
It is ridic expensive, and if it is really going to “take off,” it will be for more than one year, a la UA.
Also, after VLCM I have become skeptical of niche brands for LT investing purposes. I knew that company’s books like the back of my hand and the industry, none of which matters when mgt. underperforms.
trading LULU, well, anything can be traded so I have no color for that.
If you’re looking in the retail sector, I would look at DECK - sitting right around here at its 50 day moving average and the rally up to it has been on minimal volume. Not a store but a product. If it breaks lower here, I think it would be a prime short. That $118-$120 area is going to be very tough to overcome, but if it does, you cover. Just my two cents.
Danny-you win on ABAT, for now. On a more serious note, these graphs that you guys use…what program are they from, is it something you buy or subscribe too? Thanks, DW
I agree on DECK but more for trade purposes. I think ANF can easily see 2004 prices in a crappy consumer environment
DECK is a what hot girls wear. Until that changes tons of ugly girls will buy the shoes to emulate the hot girls.
I added you to my blogroll btw
Danny - I graciously accept victory over ABAT, but rest assured, the stock will always suck horse balls.
The program I used to make those charts is blocks 3.0.
Danny, I’m hitting DECK for the second time tomorrow. Hot girls lie, charts don’t.
I like your ANF idea too, though. Who owns Hollister? That’s another fad gone bad.
Had a friend in college named Hollister, those damn clothes with her name all over must tickle her silly.
Jake - DECK will for sure go down.
I brought it up in the same screen as urbm and anf and it did not show the deteriorating fundamental trends YET. Which of course doesn’t preclude it from being a good short.
I was just amazed at how well ANF has done, relative to its apparent fundamental deterioration. Stocks like GES, JWN had deteriorating fundies, and got 40% haircuts. What gives ANF?
What gives (with) ANF?
_____________________
My opinion? Nothing more than it’s position as the superior brand name in it’s category. IOW, it’s currently enjoying a “flight to quality” as other lesser brands get mustache-punched. This is often how things work in a deteriorating market environment… the best get taken out back to be shot last.
But they are taken out back and shot, no doubts.
entirely reasonable explanation Jake.
Here is my shorter yet just as insightful analysis,
Teenagers buy four things and in this order.
1. gas (into their cheap hand me down chevy gas guzzlers)
2. beer
3. drugs (cannabis futures are up by the way)
4. trendy bullshit from abercrombie and hollister
im guessing the little fuckers won’t sacrifice any of the first three. (especially 2 and 3 if they are anything like i was)
I agree. 4 will be tossed aside.