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PacSun - tactical surfer - short squeeze?

|Includes: Pacific Sunwear of California, Inc. (PSUN), TLB

PacSun has lost market share as fickle teen tastes have moved away from the California surfer look. Their old management team frittered away a good franchise and a large cash horde.

The new management team has upgraded its fashion look, but the turnaround has been slow and PSUN missed revenues last quarter.

It was widely expected that PacSun would be on the ropes this quarter. The NY Post business section just pronounced it all but dead. Its biggest outside shareholder stopped accumulationg shares. The bears ramped up their short positions and looked to be prepared to push it under with a wave of selling upon todays earnings release. 

Looks like PSUN is doing some tactical surfing around the rocks. In addition to better than expected results, it announced a multi-pronged recovery plan, including exiting unprofitable stores through deals with landlords, additional financing with a bank and PE group, and a shareholder rights program. Convertible prefered has been issued to the PE group.

The Street identified PSUN as a short squeeze candidate on positive earnings. The news is beyond earnings. With a large amount of shares owned by an overseas investment group, PSUN's float is less than its outstanding shares.

PSUN has been trading up after hours. After todays posditive news on Talbot's, another distressed retailer, tomorrow should prove interesting for PSUN.

Just my opinion.