Three Short Ideas: Standard Pacific, Under Armour and Trump Entertainment

Includes: CAA, TRMP, UAA
by: Dan Weiss

Last week, I posted on three stocks that look interesting for potential purchase Mitcham Industries, Key Technology and New Frontier Media, that I am currently conducting due diligence on. Although, I do not actively short in the portfolio, here are three stocks for which I consider there to be significant downside risk to their stock price over the next several months.

1) Standard Pacific (SPF)$5.13: I continue to be of the opinion that this will be the first large homebuilder (several smaller ones have already done so) to potentially be forced into reorganization due to issues with covenants and the company's high degree of leverage. The company operates in many of the most difficult housing markets (Florida, Arizona, California, Nevada, Colorado) in the country.

2) Under Armour: (NYSE:UA)$34.57: The company recently reiterated annual sales growth, however, my own models show a good chance that they will not be able to meet their expectations as sales growth continues to slow. I personally like the products, but at current valuations the stock is still a bit expensive, especially considering the fairly high odds that the company will not be able to meet current growth expectations over the next 1-2 years.

3) Trump Entertainment Resorts (TRMP)$2.71: In my opinion, Trump's casino resorts are outdated as compared to other local casinos in the area such as Borgata, the company is saddled with an extremely high debt load (debt/equity of over 7) and the Atlantic City gaming market is getting hurt by the recent introduction of gaming in Pennsylvania, continued competition from Delaware and the potential smoking ban in New Jersey.

To take a look at holdings in my portfolio please go to: My investment philosophy is long-term oriented, but I was able to have a very strong April outperforming the Russell 2000 Index by over 6% on the heels of very strong earnings releases and positive news on one of the healthcare holdings, and have started off May with strong returns due in part to the acquisition of Moldflow in the portfolio.