Whole Foods to Shorts: "Drop Dead"

whole-foods-austin

The Austin, Texas Whole Foods Flagship Store

I was in a Whole Foods store on Super Bowl Sunday earlier this month stocking up on microbrews (Dogfish Head Ale) and gourmet potato chips (North Fork).  The place was packed, which was weird because half the other stores in the shopping center had “going out of business signs” in the windows.

I didn’t think much of how crowded the store was, but last week, the anecdotal evidence became empirical evidence as Whole Foods Market, Inc. (WFMI) not only beat their earnings estimate, they were also able to give analysts better than expected guidance for 2009.

The stock absolutely exploded from around 9 to over 13 by the next afternoon.  This represented a 40% plus gain in a market where every single stock goes down every single day without exception.

Aside from WFMI being the sole bright spot on my trading screen this week, it’s move was notable for another reason…the fact that it shouldn’t have been possible!  There were 16 and a half million shares short on WFMI according to the most recent data, roughly 12% of the float was betting against the company.  The short story just made too much sense; virtually every single retailer in the US is hurting right now with the consumer basically down for the count, so how can an overpriced chain of high end supermarkets possibly come in with decent quarterly numbers?

Well, shorty got creamed last Thursday, and even though I wasn’t on either side of the trade, it was pretty cool to see that this can still happen and that stocks actually have the ability to go up every once in a while.  The fact that it was Whole Foods, a perennial target of the shorts, that represented, well that’s irony for ya.

I would guess that three things happened here to produce the unexpected pop.  First, the short figures that are published are probably low as bears have gotten extremely more confident and aggressive recently.  Second, you could make the case that consensus numbers from The Street had come down so low, that WFMI could basically bunny-hop over them without much trouble.

The third factor to me is the most interesting because it reawakens the part of me that’s been dead and buried as a trader and investor over the last year…this would be the fact that there is still room in this market for doing your homework.  It is still possible to catch a stock that can outperform if you’re armed with the right information and timing.  Yes, the consumer has stopped eating out in restaurants but they haven’t all resigned themselves to canned peas and generic groceries just yet.  Most Whole Foods stores are built in cosmopolitan areas, and even though the upper and middle class are extremely hard-hit in this recession, they still haven’t waved their surrender flags just yet.  So, if they’ve been forced to eat meals at home, they’ve determined that these meals will still be interesting and contain the best of ingredients and gourmets touches.

As a manifestation of this trend, I present to you, ladies and gents, the Whole Foods earnings beat!

Since acquiring chief rival Wild Oats, Whole Foods essentially has this shopping experience on lock down with a borderline monopoly in many urban centers.

Congrats to you and your shareholders, WFMI.  Nice to see that good news is still possible.

This post is making me hungry, TTYL.

Full Disclosure:  I currently have no positions in Whole Foods (WFMI) in either personal or client accounts

Tags: , , , , , , , , ,

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. خرید vpn commented on Aug 31

    vpn ایفون

    With regard to ergonomics and the sophisticated technilogy Heuer duplicate watches have been the great samples of athletics watches.

  2. Shoptips commented on Aug 31

    Shoptips

    […]that will be the finish of this report. Right here you will obtain some web-sites that we think you will enjoy, just click the links over[…]

  3. how to use clone a willy commented on Sep 02

    how to use clone a willy

    […]Here is a superb Blog You might Obtain Fascinating that we Encourage You[…]

  4. tiket pesawat commented on Sep 04

    tiket pesawat

    […]one of our visitors not long ago suggested the following website[…]

  5. benwa ball commented on Sep 05

    benwa ball

    […]very handful of internet websites that take place to be in depth below, from our point of view are undoubtedly nicely worth checking out[…]

  6. خرید وی پی ان commented on Sep 07

    vpn ایفون

    we arrived across a amazing web site that you just could probably delight in. Take a search in case you want

  7. خرید فیلتر شکن commented on Sep 10

    vpn ایفون

    When I originally commented I clicked the “Notify me when new comments are added” checkbox and now each time a remark is extra I get three emails with the exact same remark. Is there any way you can get rid of me from that support? Thank you!

  8. http://www.hunnitbrand.com commented on Sep 10

    http://www.hunnitbrand.com

    […]we prefer to honor several other internet web-sites on the internet, even though they aren’t linked to us, by linking to them. Underneath are some webpages really worth checking out[…]

  9. سکس ایرانی commented on Sep 11

    سکس ایرانی

    […]always a major fan of linking to bloggers that I appreciate but don’t get a great deal of link appreciate from[…]

  10. FS19 mods commented on Sep 12

    FS19 mods

    […]although sites we backlink to below are considerably not related to ours, we really feel they are essentially worth a go as a result of, so have a look[…]

  11. farming simulator 2019 mods commented on Sep 12

    farming simulator 2019 mods

    […]one of our guests lately recommended the following website[…]

  12. erotic sex stories commented on Sep 13

    erotic sex stories

    […]usually posts some really intriguing stuff like this. If you’re new to this site[…]

  13. Stepfamily Porn Online commented on Sep 14

    Stepfamily Porn Online

    […]very couple of web sites that come about to become detailed beneath, from our point of view are undoubtedly effectively really worth checking out[…]

  14. Stepfamily Porn Online commented on Sep 14

    Stepfamily Porn Online

    […]here are some links to web-sites that we link to mainly because we assume they’re worth visiting[…]