Thursday, April 17, 2008

Laying Down

I almost had a moment of weakness this morning. I saw that TPX was going to announce their earnings after the bell this evening. I have had so, so many stocks gets crushed recently post earnings, who could blame me for being gun shy? In addition, they do have that four letter word: debt.

But I did a little reassuring research. Of course it is easy to bias your research and focus on that which agrees with you. The first point was that S&P had recently (in March) downgraded them to stable. Now stable isn't the best (I think positive is) but it does mean S&P had kicked the tires (pretty hard, as I know from experience) and at least thought things weren't terrible (S&P Moves Tempur-Pedic Outlook to Stable).

The other comforting thought was that two hedge funds recently took major positions in TPX and they were funds that knew the company and management well... so I assume they were "informed" buyers. After that, I decided to stand pat.

And it appears to be a good move (Tempur-Pedic Reports First Quarter Earnings). While TPX did not exactly have a "Google" moment, expectations were so low that the stock moved up 10% in happy hour trading (granted not the most reliable market). They said they expect to earn $1.20 to $1.45 next year... that is not a disaster in a down market for a $12 stock.

Tomorrow may be interesting. 35% of the stock is short. It wasn't a blow out, but it isn't a blow-up... I don't think I'd want to be short.

Not much other news. In the past two days PRLS has gone from a low of $1.95 to $2.15. I do think they'll start moving towards $2.85, which is my back of the envelope value. Being a WiNeR about WNR yesterday seemed to have worked... the stock was up 3.25%.

That is a wrap. Go out tonight and buy a comfortable Tempur-Pedic mattress., and tell a friend as well. I know firsthand that they are super-duper.

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