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David Pinsen
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I founded Launching Innovation, LLC, to bring together developers, designers, and academic finance experts to create easy-to-use tools to solve complex problems for investors.
My company:
Portfolio Armor
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Steam Catapult
  • Downscale dogs versus upscale steaks 0 comments
    Jun 30, 2010 8:56 PM | about stocks: NATH, MRT

    Paul Krugman says were entering a Third Depression. John Hussman says ECRI’s data predict a double dip recession1. Seems like a better business environment for downscale burgers and dogs than upscale steaks.

    That’s the macro picture behind the Altman Z”-score pairs trade I entered today: long Nathan’s Famous, Inc. (Nasdaq: NATH), which has an Altman Z”-score indicating financial strength, and short Morton’s Restaurant Group, Inc. (NYSE: MRT), which has an Altman Z”-score indicating financial distress and risk of bankruptcy.

    And here’s a technical picture, courtesy of Short Screen and Slope of Hope commenter Cnairn:

    NATH/MRT

    I’m using 18% trailing stops on both sides of this trade, which should be loose enough to give this some time to play out. I may tighten or loosen these stops as events transpire.

    1Though today’s FT’s Lex column pushes back a little on that.




    Disclosure: Long NATH, Short MRT

    Disclosure: Long NATH, short MRT
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