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Jorge Aura's  Instablog

Jorge Aura
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For over 10 years I have been involved with the financial world. I am currently an independent investor with amateur level.
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  • Wet Seal Inc: A Small Golden Opportunity

    In my years as an investor in the market, I never thought I could see a unique opportunity as The Wet Seal Inc (NASDAQ:WTSL) is offering us right now. The Wet Seal, Inc (WTSL) is a special retailer that operates stores and sell fashionable, contemporary apparel and accessory items for female consumers. In 2013, The Wet Seal operated with two segments: The Arden B and Wet Seal segments. However, on April 27, 2014, it announced the conversion of Arden B stores with Wet Seal Plus merchandise. This story was repeated with its competitors. Abercrobmie & Fitch (NYSE:ANF), Pacific Sunwear (NASDAQ:PSUN) and American Eagle Outfitters (NYSE:AEO) also in the past had to make changes in their market segments. The Wet Seal Inc (WTSL) conversion could be really positive. The company wanted to cut the wrong financial path that Arden B stores were following.

    The company has good prospects with these changes. Recently, John D. Goodman, Chief Executive Officer, said: "With this process under way, our management team and Board of Directors will be focusing greater attention on our sweeping strategic initiatives, and this change positions us to take advantage of opportunities for growth within the Wet Seal brand. We are making progress against our strategic plan to enhance Wet Seal's product, merchandising, customer engagement and overall store performance, as well as drive growth in our e-commerce business. Importantly, our transition strategy for Arden B accelerates our opportunity to expand in the growing junior plus market."

    Valuation

    In the chart below you can see the first reason by which The Wet Seal shares could a small golden opportunity. Wet Seal has exceeded the MA 50 located at $0.93 with strong volume. The MA 200 is located at $2.07.

    (click to enlarge)
    Source: finviz.com/publish/071414/WTSLc1dl1546.png

    The second reason why The Wet Seal could a small golden opportunity is the average analyst consensus target price situation at $1.90. On July 3, 2014 The Wet Seal Inc closed at $1.02. The upside potential is close to 90% on current prices. But if you look at the last five years Net Income (NYSE:TTM) chart, we can see that The Wet Seal was in a worse situation during the early 2013.

    WTSL Chart

    WTSL data by YCharts

    On July 10, 2013 The Wet Seal shares reached its maximum year level at $5.09. At that time, the economic situation of The Wet Seal was not better than today. Therefore, it means that the shares could reach those levels again in the long/medium term.

    Insiders activity

    In 2014, Wet Seal insiders have bought 195,120 shares. This situation shows their confidence in the company.

    InsiderPositionBuy DateSharesTrade Price
    Rothstein AdamDirector2014-06-2630,000$0,88
    Rothstein AdamDirector2014-04-1420,000$1,12
    GILBERT LESLI REVP, Store and Operations2014-04-0210,000$1,36
    Bajrech KimberlySVP/GMM of Wet Seal2014-03-3110,000$1,34
    Shinn DebbieSVP/GMM of Wet Seal2014-03-3110,000$1,34
    GOODMAN JOHN DCEO2014-03-2742,016$1,19
    MILLS JOHNDirector2014-03-2625,000$1,15
    Rothstein AdamDirector2014-03-2648,104$1,15

    Conclusion

    The Wet Seal is a company whose shares could be above $2 at 2014. As you have seen, it is undervalued in comparison with its past situation in the last year. It is a unique opportunity to make big profits.

    Disclosure: The author is long WTSL. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

    Jul 15 10:31 AM | Link | Comment!
  • Zalicus: Clarification Of The CEO Selling Shares

    Email received from Zalicus (ZLCS) by Mr. Renz:

    Hi Jorge,

    As part of his hiring as our CEO in January 2010, Dr. Corrigan received 750,000 restricted stock units (RSUs) that would vest and ultimately become Zalicus common stock: (1) if Exalgo was approved and (2) he remained actively employed at Zalicus at various points over the next four years. Exalgo was approved by the FDA on March 1, 2010. Therefore each January 15, from 2011-2014, Dr. Corrigan has or may have 187,500 shares of common stock vest under these RSUs. The vesting of restricted stock causes immediate taxable income to Dr Corrigan, which has to be paid in cash. To cover this tax liability, each year Dr. Corrigan then sells the minimum number of shares necessary to cover the tax bill that comes with this share vesting and then retains the remaining shares. This year, consistent with the past two years, Dr. Corrigan only sold enough shares to cover his tax liability and remains committed to Zalicus, both for the short and long term.

    I am not at liberty to comment on the article. As always Jorge, thank you for your interest in Zalicus.

    JUSTIN A. RENZ
    EVP
    Chief Financial Officer and Treasurer
    +1 617-301-7220 Voice
    +1 617-301-7108 Fax
    jrenz@zalicus.com

    Disclosure: I am long ZLCS.

    Jan 17 8:10 PM | Link | Comment!
  • Zalicus: The Accumulation Continues

    Zalicus Daily Chart

    (click to enlarge)

    Disclosure: I am long ZLCS.

    Jan 07 10:06 PM | Link | Comment!
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