Trading Places
Portfolio trading update
Long-time subscribers know I have traded in and out of Children’s Place (PLCE) during the past 12 months with some success.
To recap the journey:
I recommended PLCE when it plummeted under $10 after warning of worse-than-expected results back in February 2024, when the stock price plunged under $10/share.
Shortly after, Mithaq Capital announced that it had taken a controlling stake in PLCE, sending the stock soaring past $30/share. I recommended subscribers to take some profits at the time. I also sold some of my stake in PLCE at a significant gain at this time.
PLCE continued to slide down in stock price until earlier this week when it reported an adjusted profit for Q2 of $0.30/share compared to expectations for a large net loss.
This sent the stock price soaring during the past 2 days, briefly hitting above $12/share this afternoon! The stock price has almost tripled from its pre-earnings level under $5/share, which highlights its extreme volatility.
Source: Yahoo Finance
At this point, while I do see green shoots of an operational turnaround (mostly due to much-needed changes like cutting overhead costs, reducing extreme online discounts and driving more sales in physical stores, and eliminating free shipping), the stock seems to be trading more like a meme coin than on fundamentals.
As such, I have sold the majority of my PLCE shares today, and will keep a small stub position just to see what happens. If I learned anything from trading Gamestop back in 2021, it’s that meme stocks have a way of surprising both to the upside and the downside. But short-term sentiment-based trading is not my skillset, so I thought it was prudent to take profits and let a few shares ride for fun.
What am I doing with the proceeds from selling PLCE? Given the recent beat-down in commodities, I will likely be buying my favorite coal and offshore drilling companies as sentiment has reached rock-bottom in these sectors where I still see multi-year bullish secular trends on the horizon.
It’s been a bumpy ride with PLCE, but I’m happy to report that I made it back in one piece with some profits to spare.
Looks like I may have sold too soon! Kept some of my shares to see how the ride goes, probably some short squeeze contribution
That make us 2! Interesting to keep up with the ticker to see if the new management is able to turn the boat around.