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Aug 18 (Reuters) – Shares of Bed Bath & Beyond Inc (BBBY.O) fell 15% on Thursday after billionaire investor Ryan Cohen announced plans to sell his entire stake in the struggling retailer , following a stunning rally by the same stock this month.
Cohen’s investment vehicle, RC Ventures, intends to sell 9.45 million shares, worth $148.6 million, a filing revealed Wednesday night. The second-largest investor also offered a sell of its January call options with strike prices between $60 and $80. Read more
The disclosure of these bullish bets had sparked interest from retail investors, leading to record trading in the stock on Tuesday.
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Shares were at $19.4 in early trading, after hitting $30 on Wednesday and rising nearly 360% this month.
Wedbush brokerage downgraded the company to “underperform” and reaffirmed its $5 price target, saying the stock appears “disconnected from fundamentals” at the current valuation.
“The news that Ryan Cohen might sell his stake in BBBY seems to have spooked the loyal followers of the same stock,” said David Jones, strategist at Capital.com.
“Unlike the frenzy of the past, (retail) traders seem more inclined to follow institutional wisdom than blindly fight for companies with poor fundamentals.”
A rebound in the broader stock market has revived speculative options trading on individual stocks among individual investors after volatile markets turned them away from risky bets earlier this year. Read more
So far in August, the surge in shares of Bed Bath & Beyond had sunk more than $600 million into the pockets of those who bet against the stock, S3 Partners said on Wednesday.
However, short-term interest rose to 55% of the company’s free float as bearish investors managed to find attractive entry points, the analyst firm said.
The company’s ticker was up on investor-focused social media platform stocktwits.com.
The company has added three new directors to its board after reaching a deal in March with activist investor Cohen, who is also chairman of GameStop
The home goods retailer ousted its CEO and reported slumping sales in June. Read more
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Reporting by Medha Singh and Anisha Sircar in Bengaluru; Editing by Vinay Dwivedi
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