TBL: ...A Thousand Words

It's easy to kick yourself over missing out on a money-making opportunity -- only to realize that sometimes the best thing to do in the spirit of risk management is to do nothing.

 

 

A law firm announced today a class action lawsuit against Timberland and several of its officers for breach of the Securities Exchange Act of 1934. We won't comment on the merits of the lawsuit, other than to say that a picture tells a thousand words. See below. 

 

While we kicked ourselves on the day of the upside surprise in January, we held our ground despite TBL seemingly having the best momentum in the footwear space. Several things did not smell right about it, which all came to fruition in May.

 

While we wish we'd been on the right of the both trades -- sometimes the best thing to do in the name of capital preservation and risk management is to do nothing -- especially when management credibility is at hand.

 

We won't be the judge and the jury on this one. That's the SEC's job. But we can look at historical price, sell-side/buy-side sentiment, and management stock sales. The simple conclusion is that after the blowout 4Q results and bullish comments about future shipments, we saw sentiment remain near peak levels despite a 45% run in the stock. Simultaneously, we saw management stock sales kick in, with several sales over 1Q right through the 1Q blowup. 

 

You be the judge. Regardless of anyone's opinion, the last thing this management team needs right now is a creibility problem.

 

 

From the press release:

"...the complaint alleges that, during the Class Period, the Company disseminated overly optimistic statements about then-present sales trends, cost discipline and inventory levels and an anticipated return to a 15% operating profit, and that, as a result of these representations, Timberland share prices traded at artificially inflated prices. However, at the same time the Company was making such statements, certain of its officers and directors concealed that demand for Timberland’s key products had actually declined dramatically, its inventory levels were rising, and Timberland had significantly increased advertising spending to counter lackluster sales, thereby materially decreasing operating income. On May 5, 2011, Timberland disclosed the financial results for the Company’s first quarter 2011 that were far below its bullish Class Period public statements. As a result of this revelation, prices of the Company’s common stock plummeted."

 

TBL: ...A Thousand Words - tbl1


Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more

Neurofinance: The Psychology Behind When To Sell A Bull Market

"Most momentum investors stay invested too long, under-reacting and holding tight after truly bad news finally arrives to break the trend," writes MarketPsych's Richard Peterson.

read more

Energy Stocks: Time to Buy the Dip? | $XLE

What the heck is happening in the Energy sector (XLE)? Energy stocks have trailed the S&P 500 by a whopping 15% in 2017. Before you buy the dip, here's what you need to know.

read more

Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more