Micheal Burry Loaded Up On An Activist Target in his newest filing 👀
I haven’t seen a setup in a stock this crystal clear in a long-time. Over a five-year period the stock price has crashed 70%. The management team cut the dividend, resulting in an even steeper decline in the equity valuation as dividend investors have abandoned ship. The management team is focused on extreme debt reduction. Working capital is getting monetized at rapid rates. And the company is a global powerhouse with brands worth in excess of the current enterprise value.
But here is the best part.
There is an activist investor who is calling for management to reduce costs even further, pay down debt and even said we need a new executive team to steer this sinking ship. And this isn’t any run of the mill activist either. This is the activist group that went public on the powerhouse L Brands and succeeded.
The stock is deep value. Catalysts include additional monetization of working capital, further paying down debt and a continued improvement in the activewear market that has taken a beating.
To make things even more juicy, Micheal Burry has taken a position in this name. But this shouldn’t surprise you. As we recently detailed, Micheal Burry is a deep value investor by heart. He loves cheap stocks and mean reversions. And this company is the perfect example of that.
Over the near-term the stock could double. And in the long run it could reach back to the $20 per share high of 2019. With a share price of only $5.43, this stock is as cheap as the come.
Hope you enjoy our thesis on why Micheal Burry purchased this deep value name.
Stay tuned as it will be a busy week. There is a lot to cover….
Keep reading with a 7-day free trial
Subscribe to Trade Trackers to keep reading this post and get 7 days of free access to the full post archives.