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.
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.