Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

Equity Bottom-Up

<ul>
<li>Liquidity shorts can be great short candidates.  The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements. </li>
<li>Liquidity shorts have built-in catalysts, have moderate to higher betas,  and can have strong down moves if a crisis develops.  They can go bankrupt, pushing the stock price near zero.</li>
<li>Today we are flagging Bed Bath, Blink Charging, Natera, Asana.</li>
</ul>


Liquidity shorts can be great short candidates.  The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements. 
Liquidity shorts have built-in catalysts, have moderate to higher betas,  and can have strong down moves if a crisis develops.  They can go bankrupt, pushing the stock price near zero.
Today we are flagging Bed Bath, Blink Charging, Natera, Asana.


Liquidity Risk Short Candidates: Bed Bath, Blink Charging, Natera, Asana

Event-Driven

<ul>
<li>This model seeks companies facing dangerously high leverage coupled with negative or declining cash flows.  It considers interest expense, capex and short term maturities for additional input. </li>
<li>The companies may not be viable given cash flows and capital structures.  These shorts tend to have  higher betas  and can have strong down moves as the crisis is recognized. </li>
<li>This week we flag: Carvana, Life Time Group, Bed Bath &amp; Beyond, Surgery Partners</li>
</ul>


This model seeks companies facing dangerously high leverage coupled with negative or declining cash flows.  It considers interest expense, capex and short term maturities for additional input. 
The companies may not be viable given cash flows and capital structures.  These shorts tend to have  higher betas  and can have strong down moves as the crisis is recognized. 
This week we flag: Carvana, Life Time Group, Bed Bath &amp; Beyond, Surgery Partners


Solvency Risk Short Candidates: Carvana, Life Time Group, Bed Bath & Beyond, Surgery Partners

AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

AlphaSituations-Event/Catalyst Driven Research

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

<ul>
<li>BBBY's slower than hoped for turnaround has caught the attention of another activist, <a href="https://www.smartkarma.com/entities/gamestop-corp-class-a" target="_blank" data-smartkarma-citation="entities:13790:1" rel="noopener">GameStop (GME US)</a> Chairman Ryan Cohen's RC Ventures</li>
<li>Cohen is urging BBBY to spin-off its outperforming buy buy BABY business or sell BBBY as is outright in a Go-Private transaction</li>
<li>With the long-term impact of the latest development uncertain, the boost already given to the shares may prove short-lived  leaving additional share price strength an even better reason to exit</li>
</ul>


BBBY's slower than hoped for turnaround has caught the attention of another activist, GameStop (GME US) Chairman Ryan Cohen's RC Ventures
Cohen is urging BBBY to spin-off its outperforming buy buy BABY business or sell BBBY as is outright in a Go-Private transaction
With the long-term impact of the latest development uncertain, the boost already given to the shares may prove short-lived  leaving additional share price strength an even better reason to exit


ActivistTalk: The Activist Excitement Surrounding Bed, Bath & Beyond Could Be Short-Lived This Time

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<div>Ongoing market dynamics remain largely positive and there continues to be an absence of major breakdowns across all Sectors and the major averages. As a result, we expect higher prices ahead and recommend adding exposure on pullbacks. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Health Care.</div>

Ongoing market dynamics remain largely positive and there continues to be an absence of major breakdowns across all Sectors and the major averages. As a result, we expect higher prices ahead and recommend adding exposure on pullbacks. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Health Care.

S&P 500, Russell 2000 Testing Short-Term Support

<p>An early misread of the last week's  3Q FY 2020 earnings report is being corrected,  no doubt helped by a short squeeze due to the stock's relatively high short ratio. Under the stewardship of new Mark Tritton, BBBY's turnaround is not only taking hold even through the pandemic, but is gathering momentum. While early skepticism has wavered, with the stock ~75% above its level the first day Tritton began his new role in early November 2019, our valuation assessment still suggests that there is 33% plus more share price upside without pushing the envelope too far out. The combination of its high short interest stock coupled with an aggressive share  repurchase program by the company suggests that this  revaluation could occur fairly quickly.  </p>

An early misread of the last week's  3Q FY 2020 earnings report is being corrected,  no doubt helped by a short squeeze due to the stock's relatively high short ratio. Under the stewardship of new Mark Tritton, BBBY's turnaround is not only taking hold even through the pandemic, but is gathering momentum. While early skepticism has wavered, with the stock ~75% above its level the first day Tritton began his new role in early November 2019, our valuation assessment still suggests that there is 33% plus more share price upside without pushing the envelope too far out. The combination of its high short interest stock coupled with an aggressive share  repurchase program by the company suggests that this  revaluation could occur fairly quickly.  

ActivistTalk:Bed Bath & Beyond-Room For More Share Price Appreciation As Turnaround Gains Momentum

United States

Bed Bath & Beyond Inc. operates a nationwide chain of retail stores. The Company, through its retail stores, sells a wide assortment of merchandise principally including domestics merchandise and home furnishings as well as food, giftware, health and beauty care items and infant and toddler merchandise.

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Bed Bath & Beyond (BBBY US)

Liquidity Risk Short Candidates: Bed Bath, Blink Charging, Natera, Asana

Liquidity risk short candidates may not be economically viable given cash flows and capital requirements. This week we flag Bed Bath, Blink...

Eric Fernandez, CFA

Solvency Risk Short Candidates: Carvana, Life Time Group, Bed Bath & Beyond, Surgery Partners

This model seeks companies facing dangerously high leverage coupled with negative or declining cash flows. This week we flag: Carvana, Life Time...

Eric Fernandez, CFA

ActivistTalk: The Activist Excitement Surrounding Bed, Bath & Beyond Could Be Short-Lived This Time

With the long-term impact of the latest activist move uncertain, the boost already given to the shares may prove short-lived leaving any further...

Robert Sassoon

S&P 500, Russell 2000 Testing Short-Term Support

Ongoing market dynamics remain largely positive across all Sectors and the major averages. As a result, we expect higher prices ahead and recommend...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Liquidity Risk Short Candidates: Bed Bath, Blink Charging, Natera, Asana

Liquidity risk short candidates may not be economically viable given cash flows and capital requirements. This week we flag Bed Bath, Blink...

Eric Fernandez, CFA

Solvency Risk Short Candidates: Carvana, Life Time Group, Bed Bath & Beyond, Surgery Partners

This model seeks companies facing dangerously high leverage coupled with negative or declining cash flows. This week we flag: Carvana, Life Time...

Eric Fernandez, CFA

ActivistTalk: The Activist Excitement Surrounding Bed, Bath & Beyond Could Be Short-Lived This Time

With the long-term impact of the latest activist move uncertain, the boost already given to the shares may prove short-lived leaving any further...

Robert Sassoon

S&P 500, Russell 2000 Testing Short-Term Support

Ongoing market dynamics remain largely positive across all Sectors and the major averages. As a result, we expect higher prices ahead and recommend...

Vermilion Research

ActivistTalk:Bed Bath & Beyond-Room For More Share Price Appreciation As Turnaround Gains Momentum

Our Insight explains why this stock has much further to go in value appreciation despite already climbing by more than 60% over the past year.

Robert Sassoon