B. Riley Asset Management Acquires Rights to Manage Dialectic Hedge Funds
- Press Release
#3: Jeff Van Sinderen
Company: B. Riley & Co.
Industry covered: Retailers: Broad Line & Apparel
BEBE: This was a contrarian call (one of our favorite kinds). There was substantial doubt about the prospects for a turnaround. Business had been weak for a prolonged period and you had an opportunity to buy the stock in the mid $5's at a depressed valuation in early 2011 when everyone still hated it. The new merchandising team got it right and the company has now put up several quarters of positive comps and of course, now everyone loves it.
WTSLA: I think we could have done a better job predicting the new CEO's ability to positively impact the business by the Fall '11 season. The stock actually had a good run-up on positive comps (arguably, that was largely a product of the former CEO's regime) until September when comps hit a wall. In retrospect, it was a mistake for us not to downgrade when the stock approached our price target in August. We downgraded in October at the first sign of a weaker data point and although the stock subsequently moved back up, it did not reach the prior highs of a couple of months earlier and thus, our call proved to be late.
The extremes in valuation (at both ends of the spectrum) and some investors' tendency to play momentum in both directions with little regard for valuation, never ceases to amaze me and I think the recent market run-up highlights this phenomenon.