Why does this stock have such massive short interest?
Did some quick and dirty research on the company, it seems like a solid enterprise selling at a fair price. Why are so many players not only bearish on the company, but are so convinced that it's gonna take a hit that they're willing to risk a short? What do they know that we don't?
I'll tell you why. The company in the last few years married a style fad. The fad was tremendouly successful, and BKE rode it all the way up. There was no sublety in this fad- its in the face style, it screams. Because it became so popular, since last year that style fad has been crashing down. It is now getting to the point where most people wouldn't be caught dead going out in that style- especially the guys clothes. People will laugh at you. Brands like Guess that incorporated aspects of that fad have already moved on in their new lines.
This company is going to get smacked. I don't hold a margin account, but if I were to short any company in the planet it would be this one.
You never know why someone is shorting a stock. Most short positions are held by institutions. They often short one position against another long position in paired trades. If you think that the consumer is going to suffer in this economy you might go long a discount retailer and short someone like BKE that sells premium denim.
Most of these guys never take time to understand the companies or the operations. You might also short a stock like this if you believe there is an inverse correlation to energy and you believe those costs are headed higher. Granted most of the professionals use ETF''s these days but for guys looking to juice results they still go after individual names.
This company reminds me a lot of Chico's in their sales and merchandising. Someone that hasn't been in the stores is just going to see expensive denim and not understand the appeal of the experience in he store to the customers.
Then again they could be right........but I doubt it!
That si has always been confusing, considering "best in class", cash flow monster, and dividends. Some shorts may have been a big recession bet on $150 jeans. I've wondered about some sort of pre-sell on options, some straddle / or arbitrage thing. Mostly who knows, way down but just bumped up a bit. Analysts seem to like the shorts at times.