Jos. A. Bank: Limitations of Algorithmic Investing by Jordan S. Terry, Managing Director Stone Street Advisors LLC
Earlier today, I came across this interesting piece of “research” identifying Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) as a compelling long opportunity. For those out of the loop, Jos. A. Bank Clothiers is in the process of being acquired by The Men’s Wearhouse, Inc. (NYSE:MW) for $65/share. As you can see, since Men’s Wearhouse made its most recent offer (raising the price to $65, that is), JOSB hasn’t exactly been a great stock to trade, to put it gently. To wit:
Jos. A. Bank announces higher takeout price
+3% and change since Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) filed the press release announcing the higher takeout price, raised from $63.50 on 3/11 of this year, which was just the most recent bump in the long road that has been the The Men’s Wearhouse, Inc. (NYSE:MW)-Jos. A. Bank Clothiers journey (which, if you’ll recall, started with Jos. A. Bank Clothiers offering to buy Men’s Wearhouse back in September of last year, a brilliant strategy in my humble opinion). The odds of the bid being raised from $65 at this point are, in my fairly well informed opinion, lower than the odds that Men’s Wearhouse’s board will change its mind after conducting due diligence (itself unlikely, but non-zero). Put simply, any trader/investor can do 5 minutes of work, 15 tops, to realize there’s little upside, and a lot of opportunity cost, not opportunity, getting long Jos. A. Bank Clothiers at this point.
Continued from part one... Q1 hedge fund letters, conference, scoops etc Abrams and his team want to understand the fundamental economics of every opportunity because, "It is easy to tell what has been, and it is easy to tell what is today, but the biggest deal for the investor is to . . . SORRY! Read More
TheStreet’s QuantRatings system, available for the bargain price of “less than $1 per week!” touts, among other things, “In-depth analysis of the stock’s most important fundamental and technical factors…”
One would hope that, among the many factors this or any system “analyzes” that existence of a tender offer (easily found in SEC filings, press releases, etc by man or machine) would be one of them. Alas…
With novice and professional traders/”investors” alike increasingly relying on any “new information” in the market to inform their decisions, such garbage systematic “research” is as much if not more a source of risk than a source of opportunity.
Making money investing/trading is not easy; assuming for even a moment otherwise is a surefire way to shoot oneself in the foot.