Pre-Christmas buying frenzy at Cost Plus?

December 12, 2007

images2.jpegLast Monday, Cost Plus (CPWM) reported its third quarter results after the market closed. During the quarter, the company lost money and same store sales fell by 4.3%, which the company said was related to “heavy coupon activity” during the third quarter a year earlier. The next day, one analyst at a small firm lowered their price target on the stock from $4 to $3. But few others paid much attention.

But then this past Monday, Cost Plus filed its 10-Q for the quarter and there were also three new Form 4s filed, including buys by Chairman Frederic Roberts and Director Clifford Einstein. Also adding to their holdings was Santa Monica-based Red Mountain Capital, which picked up shares at prices under $4. Those filings, taken together, prompted the stock to take off on Tuesday and it has continued to climb today for an 80% appreciation in 5 days.

The Q provides few clues. A quick skim shows some interesting changes including fixing some of the material weaknesses that were outlined in the K. The filing includes various details on some of the steps Cost Plus took to fix the problems. There’s also two new severance agreements in the filing, but both are for relatively new executives at the company, so it’s hard to read much into that.

Still, something is clearly driving this and driving it hard. And pre-Christmas buying, even by some insiders, seems a bit hard to swallow.

Leave a Reply

You must be logged in to post a comment.