This was mentioned in other related sub-reddits.
(see:http://ift.tt/2htS1NH).
I believe Signet Jewelers is now an even better short because it could be removed from being an S&P 500 component. It repeatedly falls below the threshold met by other viable companies, more frequently over the past few months as the S&P rises but SIG loses its luster.
Most recent example: http://ift.tt/2fefGAQ
I also have fought heavily against Kay Jewelers (see my post history). My wife (then girlfriend) worked for them, and their corporate was not with a proactive attitude. If we were savvier at the time, I think we would have had an open-and-shut case against them (as so many others have found).
Also, despite the big gem-swapping fiasco that had plagued Kay Jewelers through last year, there was another more recent Kay Jewelers incident where a manager aided a man in selling a fake Rolex on OfferUp: http://ift.tt/2htS24d "FOX 46 Charlotte called the Kay Jewelers Store manager and asked about this event and she said she wasn't allowed to talk and to call their corporate offices and quickly hung up."
See article about wide-scale accounting distortions at Signet: http://ift.tt/2feSPW1
Furthermore, as many redditers have been keen to point out (in /r/jewelry, /r/weddingplanning & elsewhere), engagement ring shoppers are falling more and more into three categories:
- The Blue Nile shoppers (who don't necessarily need to see the exact gem before buying it)
- Smaller local jewelry store shoppers (who realize that the margins charged by the big ticket stores: Zales, Jared & Kay, are unwarranted, and that it's still cheaper and less risky to appraise their gem through a third party).
- People who realize that they do not need to buy an expensive diamond at all, and would rather spend the extra money on a nice wedding & honeymoon. This is because more women are open to the idea of having an equally beautiful moissanite ring versus all the risks & worries that come with wearing jewelry that costs tens of thousands of dollars.
Given all this, it's surprising that any large institutional investors (Black Rock, etc.) would see SIG as a viable long-term investment. Indeed, in the net, a few are exiting. Mark Light (former CEO of Signet, who resigned last month under a cloud of controversy over a sex-for-promotions scandal) is actively exercising and dumping the shares he was awarded. Other than their chairman, Todd Sitzer (who only bought about $100k worth of shares when the price was $47.908), all insider trades have either been 'gifts', 'acquisitions' at a price of $0 (assuming employee award exercises) or dispositions (executives and former executives dumping their shares).
"In the world of business, bad news often surfaces serially: You see a cockroach in your kitchen; as the days go by, you meet his relatives." -Warren Buffet
TL;DR You could instantly profit when more bad news hits SIG by purchasing put options because VIX and option premiums remain so low overall. This, while minimizing your downside risk.
Submitted August 04, 2017 at 08:34AM by Siliconjurer http://ift.tt/2uaKhGd
