SHOE (Shoe Zone) is a chain of shoe shops.
I bought on 20 April 2015 at 258p. The company had a stock rank of 93, a Piotroski score of 8, and a yield of 5.2%. It passed the screen of screens, including the Value Momentum screen. The odds looked good to me, so I bought.
What could possibly go wrong? The trading statement issued the following day, that’s what. The weather was blamed, and the fateful words “below market expectations” sent the shares down 28.2% to 185p. Needless to say, I was not a happy bunny.
At that point, I decided that my investment was a bust idea, and wanted out. The question is: should I bail out there and then, or wait? I consulted my decision matrix (http://is.gd/WUoFcJ). The combination of cheapness and high momentum suggested to me that I should hold onto them for awhile, and hope for a recovery within 90 days. If it weren’t for the fact that they were cheap, a sell would have been in order.
Share price declines continued, and in fact lasted much longer, and were deeper, than I expected. The shares finally bottomed at 160p on 27 April. There was a quick recovery to 175p. Presumably it was around about those levels that people decided to bail out, and short-term traders took their profits. The flat-lined for awhile before bottoming out at 160p again on 7 May.
The shares recovered subsequently. I decided to bail today at 188.8p, figuring that I wasn’t expecting much better.
Maybe the company will go on to recover nicely, and in fact grow. It has left a sour taste in my mouth, though.
At the time, I noted that the company was listed on AIM and had a listing period of less than a year. I was aware of these facts as potential red flags, but, alas, I was seduced by the mechanical screens.
I’ll see how the shares fared 6 months down the line. My suspicion is that, unless the company pulls a rabbit out of the hat, the shares won’t go anywhere.
BWTFDIK. Not one of my better ideas.