At Research Edge, we're all about empowering our clients with both our process and insight to optimize timing and sizing of a position to maximize Alpha. A massively important part of this process is our morning meeting, which - by a long shot -- is the most thought-provoking forum I have ever had the honor of being part of.
This morning I laid out my recent conflicting fundamental thoughts on Under Armour - and how such solid performance and execution I am seeing in the footwear business, is being offset by far greater promotional spend in apparel than I think is perceived to be the case (even after the company's earnings guide down earlier this year).
That's when my Partner Keith McCullough chimed in with something that sounded like this... The stock acts like death, but short interest is mountainous, and the average hedge fund's short thesis is as stale as a 3 month old loaf of bread. At $27.28 it's oversold, and worth a shot on the long side, provided that you have a catalyst that is better than toxic. The last big volume days for UA were on the up days of the week of May 12th. Sharp and fast squeezing of a consensus short position.
Pardon me for sounding cocky, but I think I can rip apart a business model, and identify what margin and capital structure is needed to achieve a given level of top line growth as good as just about anybody. As good as I think I am in this regard, my team here at Research Edge collectively crushes just about any standard I can conjure up. It is when I can draw upon insight from my Partners here at Research Edge to make 1+1=3.
My thoughts on UA the brand and the business model remain unchanged. But after the 10 minute collaborative valuation/trading discussion, I walked out of our morning meeting more upbeat near-term on the stock.