Covestor model manager Raymond Urci brings more than 20 years of investing experience to New York based QSP Group LLC. He manages Covestor’s QuantStockPicks model. Here’s the strategy:
QuantStockPicks provides a systematic, quantitative swing trading strategy to actively trade equities in both volatile and static markets.
QuantStockPicks is a very concentrated portfolio with short holding periods, and has our highest risk score of 5. As of end of day 3/29, one position held is MolyCorp (NYSE: MCP) and the other is Lululemon Athletica (NASDAQ: LULU), the trendy, yoga-inspired apparel designer and retailer, which has stores across Australia, Canada and the United States and has seen very strong growth over the past few years.
On March 30, LULU announced it would undergo a stock split:
its board has approved a stock split in the ratio of 2-for-1 and an increase in its authorized common stock from 200,000,000 shares to 400,000,000 shares.
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Lululemon’s decision to implement the stock split sprung from the belief that investors were overvaluing the stock. A higher stock price was thus preventing new investors from buying the shares. Since a split reduces a stock’s per-share price by increasing a percentage of outstanding shares, it consequently makes shares seem more affordable for small investors.
Jim Cramer had this to say about LULU’s stock split
“This is the kind of action you see in a bull market: they announce a split,” Cramer said. “Almost every one of the splits that we’ve had and there’ve been very few of them, are greeted with euphoria. That means, what you have to understand is that we’re not at the end of a move. We’re actually at the beginning.”
Reuters noted that private equity firms are hunting in Canada for the next LULU:
“Buyers are asking, ‘is there a concept that exists now in Canada that might replicate the (success) that Lululemon had and can I help fund that growth?’,” Tuchman told Reuters in an interview from New York.
“Everyone is searching to find the next Lululemon. Lulu started off small, expanded and exploded geographically. This model is what a lot of private equity professionals are trying to discover.”
Canada routinely attracts the attention of U.S. investors who see it as a petri dish for nourishing raw talent, and the retail sector has been a favorite poaching ground.
LULU closed up 0.75% on 3/30.
Sources:
“Lululemon Announces Stock Split” Lululemon Athletica, 3/30. https://finance.yahoo.com/news/Lululemon-Announces-Stock-zacks-2821311103.html
“Private equity hunts for the next Lululemon” S. John Tilak and Pav Jordan. Reuters, 3/29. https://www.reuters.com/article/2011/03/29/us-retail-idUSTRE72S6AL20110329
“Cramer: Lululemon’s Stock Split Means Rally’s Only Just Begun” Drew Sandholm. CNBC, 3/29. https://www.cnbc.com/id/42324884
