It hasn’t been a good ride for Naked Brand Group investors since the stock is currently down to just 10 cents per share as of July 24th, 2019. That’s a 97% drop in value and many investors have written off the New Zealand based intimate apparel company.
However, Naked Group just announced institutional investors have agreed to purchase over 15 million shares at 10 cents a share in a recent press release. The company plans to use the funds to pay down debt and reinvest in the business. Seeing institutional money flood into the stock is a good sign and I added to my current position picking up another 2k+ shares.
C-level management turnover and lower annual sales have sent this stock tumbling but it’s important to give NAKD time to grow in the long run and continue producing sales.
Why I’m Buying NAKD Shares
Here are a couple of reasons:
- Heavy Institutional Buying – Institutional buyers can heavily influence a stock’s price and seeing heavy buying is usually a good sign. These managers rarely put money in completely worthless companies so they see value in NAKD brands over the long term.
- 77 Million Dollars in Sales (Not including new Costco and CVS Partnerships) – With a market cap of just 6 million dollars, I think owning a company with 77 million dollar in annual sales makes NAKD look very cheap for long term investors. Retail is a cyclical industry and while sales won’t go up in a straight line, I expect them to increase over time in a positive direction.
- Huge Short Term Gain Opportunity – If you don’t mind taking on a bit of risk, NAKD is currently under the $1 NASDAQ minimum price requirement and it will be interesting to see what steps NAKD takes to avoid delisting. A reverse split would be the most practical step but heavy institutional buying could push the stock much higher in the short term. Volume and buyers drive stock prices in the short run while earnings contribute to overall long term gains.
NAKD is a watch and see situation for me right now. I’ll continue to add to my position at prices under .10 (less than what the institutions pay).
Disclosure: I own shares of NAKD stock.
While his background is mostly related to trading stocks, he recently gained interest in real estate crowdfunding with Fundrise.