Quote from Daal:
I started to buy a stake on JCP. Only a bit 1% position so far. Goal is to get up to 3% or so.
What people are saying about the company is just music to my ears
'uncertainty', offending the CEO, talking about bankruptcy etc
There is almost ALWAYS bad news, and bad forward sentiment, when a stock gaps down on poor expectations or missed earnings.
Do you have specific fundamental reason to believe JCP outlook is misinterpreted, or is your rationale entirely "human mispricing" in a general sense?
Because if it's the second, your strategy implies that all downward gaps are to be bought, as a general rule, because all sellers are somehow "human mispricing" challenged.
That seems as foolish as saying all distressed debt opportunities should be bought.
When catching knives / buying blowouts, the whole point is due diligence on a situational case-by-case basis to determine whether the numbers, the data, the nitty gritty forward outlook probabilities, actually confirm a mismatch between knee jerk reaction and true risks.
Because sometimes it's the opposite -- sometimes the initial reaction is not nearly severe enough, with a hell of a lot more downside to go, because of all the self-styled faux contrarians around who just love feeling "smart" when they buy on a gap.
I guess I'm just perplexed. JPM, now JCP... there has GOT to be more to your rationale than just a general handwaving assertion of "human mispricing." Doesn't there???
