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Jack in the Box Inc. Message Board

  • john.heil2 john.heil2 May 26, 2011 2:04 PM Flag

    pressure on share price

    JACK is what we call in the investment business, a sold out stock. By that is meant, there are so many true believers in the ranks of shareholders, really not much stock is available for sale at this juncture pending a significant turnaround in the business which we are now getting wind of. These aficionados also realize the value and good possibility of a buyout of JACK by some private equity group. With the shares priced so reasonably, no one dares sell for fear of losing out on either the Qdoba spinoff or a possible buyout. So that is why you are seeing the price action currently, with very little stock for sale. Remember, there are two powerful forces at work in the price dynamic: a company authorization to buy another $100 million of stock in the open market, plus the humungous short interest of 3.4 million shares announced just a couple days ago. (a huge percentage increase accounted for by your usual know-nothing shorty). This is a great potential demand source for the stock, again, with few shares available. Indeed, to buy JACK in any size now is like pulling teeth. You have to contact the existing institutional holders to see whether they are willing to accommodate a big buyer. To those of us in the business these many years, this sort of situation is a beauty to behold.

    Big J in L.A., retired security analyst

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    • Again, good analysis. However, the significance of the increase in shorts (as a retired specialist and prop trader it is a side I happen to play quite frequently in the market) was probably related to the latest earnings statement. Probably just an expectation of bad news (as recent quarterly reports have been less then stellar). And, in fact, on the surface, they got it...earnings WERE down. BUT, the comps and outlook were surprisingly good! So, in this case, I am not so sure the increased short position was real significant. Still, it is out there and does represent future demand for stock. Keep up the good analysis. I really appreciate it. Now if we can just convince someone to make a run at the company.

93.05+1.48(+1.62%)2:42 PMEDT