Jos A. Bank…yes, the men’s clothing store you find in most local shopping malls. I have to be honest, I’ve never been inside one of their stores. Only seen them from the outside…and they seem to be consistently filled with middle to older aged men who look unhappy, but have a desire to look presentable in the workplace. And that’s what JOSB does, it provides men with clothing to make them look presentable…status quo if you will…so as not to offend a single person in the world. Jos A. Bank’s motto should be “if you want to be invisible, we can almost make it happen”.
Ok, now let’s look at the lack of investment merit this company has given its current stock price. I have said it before and I will continue saying it week after week…retail names are some of the most highly cyclical in the world. They can be trusted companions in wealth creation should you realize this and play the game properly. I have two different charts for JOSB below…one is the 5 year chart and the other is the 10 year chart:
JOSB 5 year
JOSB 10 year
These charts demonstrate how inconsistent this stock has been in delivering gains since its peak in 2005 and how consistent the cyclical nature of the stock has been as it has been stuck between the $20 and $50 range for the past 5 years. We must ask ourselves, given where the market is at present, paired with the fundamental deterioration we are experiencing, especially when it comes to the buying power of the American consumer, does JOSB have a chance in hell of breaking out of this cyclical pattern of behaviour? For all my readers with a GED…the answer is a resounding…NO!
Insiders seem to recognize this pattern well, as both the chairman and CEO of the company have been dumping millions of dollars of this stock since June of last year, just as JOSB hit the top of its cycle. The volume of the insider selling has been substantial, but it’s the qualifications of those who are doing the dumping that should be the biggest concern.
I don’t think it is a matter of IF JOSB falls to the middle or bottom of its cyclical range, but WHEN. The risk/reward scenario here is extremely advantageous to the short seller, as such I would like to initiate a position in this name should I be able to get a borrow. This is a difficult name to get a borrow on, as it seems that other astute short sellers have recognized the ills of JOSB. Hopefully, you will be one of the lucky ones who is able to discover a portion to sell short.
Day 28…the always poorly dressed…Dr. Kellegro.
Disclosure: None