Why Radio Shack Corp. Stock Jumped
Jan 22nd 2014 5:00PM
Updated Jan 22nd 2014 5:02PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Radio Shack were coming in clearer today, gaining as much as 21% and finishing up 17% on a news that a hedge fund took a stake in the struggling retailer.
So what: Jamie Zimmerman's LiteSpeed Management reportedly acquired an 8.1% chunk of the electronics retailer on Friday. Though the news is a few days old, it didn't seem to hit Wall Street until today, and shares spiked as investors saw the move as a needed confidence boost for Radio Shack. The jump was likely helped by Zimmerman's sterling reputation for outperforming the market and as a specialist in turnaround plays.
Now what: While Zimmerman's purchase is a positive sign for Radio Shack, the deck seems increasingly stacked against the once-strong electronics seller, as it's lost nearly $2 per share over the last year. Like Best Buy and other competitors, the company has simply become a victim of changing times, as online retail has risen and individual items that were once Radio Shack's top sellers are now easily performed by smartphones. Considering that this holiday season was a dismal one for retailers and a number of Radio Shack's peers in particular reported poor holiday sales, we could see a bloodbath when Radio Shack delivers fourth-quarter earnings next month.
Time to move out of the Shack?
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love.
The article Why Radio Shack Corp. Stock Jumped originally appeared on Fool.com.Fool contributor Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.