Making Money on a Big Drop

Friday, July 13, 2012
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		Making Money on a Big Drop   by Rob Goldman     Supermarket stocks have always been hard to digest.  Margins are slim, differentiation is difficult, and competition is fierce. While they can be good defensive stocks in inflationary or deflationary environments, they do not make good investments. With Wal-Mart (NYSE: WMT) dominating the space, it makes it that much harder to make money.   Tell that to SUPERVALU, Inc., (NYSE: SVU - $2.96) which, through its subsidiaries, operate the third-largest chain of grocery stores in the U.S.   Investors were shocked yesterday with news of the serious troubles at retail and wholesale food powerhouse SUPERVALU, Inc., following the release of its 1Q13 results. Frankly, the list of issues is long and the enormity of the issues is daunting.   Sales and profitability are down, with income dropping 45% for the most recent quarter. Management has suspended all financial guidance, along with its dividend. Capital expenses are being slashed and the Board hired Goldman Sachs and Greenhill to pursue strategic alternatives including a possible sale of the Company.   First, though, a review.   To read more click here >> or visit http://www.pennystockjunction.com     When Not to Play the M&A Game   by Rob Goldman     When I got into the real, down-and-dirty institutional side of the business in the early-mid 1990s, I came across a lot of arbitrage players.  The sentiment was that the smartest guys on Wall Street were the arb guys, followed by the debt (primarily distressed) guys, with the equity people like me bringing up the rear.    We had some arb traders who basically made their living by buying foreign stocks traded in the U.S. at one price and then selling at a higher price in the country of the stock's origin.  They didn't make a great deal on the transaction, but it was riskless.    Others would determine the value of varying underlying securities of a particular entity. By buying and selling these, they executed similar transactions by taking advantage of inefficiencies in the market.   I confess it always fascinated me. These guys were bright but they were also top-tier traders at heart.   To read more click here >> or visit http://www.pennystockjunction.com

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