Hi Dale,
The hedge fund claimed the company admitted the strategy wasn't working and the company denied making any such statement.
The retraction from Barbary Coast subsequently makes the likely facts pretty clear. They stepped over the line by inventing material.
I would allow for another possibility. Perhaps a third-party person did indeed relate such a statement to Barbary Coast, but Barbary Coast was unable to effectively prove such a statement was made, and therefore had to issue a retraction. Perhaps this third-party individual might even have had some type of association with Chattem. This type of thing happens all of the time, where something is said "off the record" but when the information becomes public, denials fly from all directions. I'm not saying that my description is what actually happened, merely allowing for the possibility.
It has been my general experience that shorts almost always do a better job of DD than their long counterparts in any given investment. So perhaps I tend to give shorts the benefit of any doubts where others may be quick to castigate them. In any event, it is my opinion that Barbary Coast has been at least as accurate in its opinions as investors in general.
I recently had the opportunity to look at Chattem in detail, as they had consistently shown up on both my value and growth screens. I also saw that article you posted, and to be quite honest, it gave me pause to think. I looked and looked and looked at Chattem. Yes, revenues and earnings are increasing. After an initial plunge in stock price, generally around the same time frame as the comments attributed to Barbary Coast, Chattem stock has since recovered and apparently has some forward momentum. But, as mmmary indicated in her post, I question the model of purchasing old and tired viable products, repackaging them, and then advertising and promoting the heck out of the "new look". I did go to stores in my area, and easily found the revamped products. Nice clean, attractive packaging. Plenty of product on the shelves, stacked nicely and neatly. Competitors' products were not nearly as plentiful, nor were the stacked piles nearly as complete as Chattem's products. My conclusion: The competitors' products were selling better in the retail stores than Chattem's comparable products. But that opinion is merely anecdotal "evidence" to support my ultimate decision to pass on Chattem for now. Time will ultimately tell whether or not I made a good decision. If I'm wrong it won't be the first time, and probably won't be the last time either.
KJC
PS - Are you still over in Europe? If so, how are things going over there? I still lurk on your 50% thread from time to time. Best wishes... |
