Bed Bath and Beyond - Buy the Uncanny Valley and Delete RedditOne of the first things you might ask yourself with this call is "How did a bull get stuck in a washer and dryer?"
The people who look more closely might ask "Why is this bull living out of a washer and a dryer?"
The short answer to both of these questions is that the dude listened to Reddit.
I say this in every post about memestocks, but Reddit isn't your friend. It isn't even social media. It's a social marketing and social influencing website masquerading as an organically-created and consensus-driven forum.
Moreover, the Chinese Communist Party's Tencent took a big stake in it many years ago and it spreads all the worst trash of Marxist-Leninsm.
Perhaps if Reddit had have collapsed in bankruptcy then the future would have been a lot brighter for several million young people. Too late for crying now, though.
Scrolling through Reddit is the intellectual equivalent of eating eight or nine bags of potato chips everyday and then complaining that you're fat and girls don't want to marry you.
There are two things Reddit is there for when it comes to trading. One is to condition you to feel that losing money, and a lot of it, is both normal and okay.
It's not.
If you're losing money trading, then you need to fix something, and fast, or just take your money and go buy yourself something nice with it, because you're obviously just gambling and are missing something fundamental in both your understanding and execution.
Wanting to get rich, and quick, will do that.
The second thing Reddit is there for is to indoctrinate your mind with pornography, socialism, Marxism, and atheism, and it happens all while you think you're reading the words and feelings of other people who are just like you.
But they're not just like you. They're not even people.
They're "professional" community organizers who are sitting in a cubicle referencing a flowchart pinned to its grey cushions collecting their $16 an hour and you can't figure it out because they told you that the very idea is a "conspiracy theory."
Bed Bath is this company that sucks and is going bankrupt. Don't believe it? Just go to a store and ask yourself why you're there instead of on Amazon on your phone.
That didn't stop BBBY from yielding 4 and 5 baggers if you happened to buy the bottom and sell the top (you didn't, Ken Griffin's trading desk did, though), and that's exactly the issue.
So the story with BBBY is that Hudson Bay Capital and a bunch of other Wall Street money effectively put a $1 billion blood infusion into Bed Bath. This comes in the form of some convertible preferred stock that has a profitable floor of about 71 cents and a ceiling of about $3.61, according to Bloomberg .
What's 500% among friends? That's what I always say.
So, taking a look at Reddit, there's two really notable things on this stock:
1) In the last two weeks there's almost a total blackout on BBBY from the WallStreetBets pump-and-dump-to-dumb-money brigade.
2) The Bed Bath subreddit has desperate bulls looking for the "MOASS" (Mother of All Short Squeezes), despite it already doing it twice in quick succession (lol, shows you their entry is higher than $5 and $7, doesn't it?), and telling each other to quickly "DRS" (Direct Register, AKA put your BBBY in an off-exchange personal wallet) in an attempt to mess with the float to manipulate Hudson's equity position on their convertible contracts.
After thinking about it for a while, I believe the blackout on BBBY on WSB is because the idea is to not attract the attention of retail buyers to the stock now that "everyone knows" BBBY is going bankrupt.
In other words, the PR company and the people who pay the PR company, who manage Reddit's trading forums, don't want people to buy cheap.
The BBBY forum is acting as mentally ill as it is because bag holders are feeling desperate and dosing a heavy stimpak of hopium.
All of this leads us to believe that, despite the reversal pattern that the short-dumpster to $7 produced, a new all time low is incoming.
After all, Hudson's risk is profitable above 71 cents, Bloomberg says. The ATL is 88 cents. This is 20%, by the way, and 20% is a lot. If you got a 20% move on the Nasdaq while holding a QQQ call you'd make like $4,000 a contract.
The thing to understand is that smart money isn't like you are, who is eternally unhedged and emotionally unstable. Hudson is hedged and really couldn't care less if BBBY goes under 71 cents for a few days because they'll just buy more. And they have a strategy to profit from the plummet in the meantime.
Of course they'll buy more. They obviously see a lot of upside to risk $1 billion on a bankrupt shitco retail chain that was trading at a 2-handle when they donated blood.
So, what kind of upside is there? Well, frankly speaking, the upside is this weird double top left at $30 during the RYAN F'IN COHEN pump and dump last year:
It might sound too good to be true, but look. BBBY short interest ending Jan. 13 and Jan. 31 are both twice as high as it was during the Cohen/Reddit retail rape.
Moreover, according to the most recent institutional holdings filings dated 12/31, only nobody firms sold out of BBBY.
While names like Bank of America and Barclays reduced their positions, bigger and more important names like Blackrock, Vanguard, Morgan Stanley, and Citadel increased their holdings.
Did they not know BBBY was on the verge of bankruptcy and stood to get delisted like Party City just did? Of course they knew. They know what comes three and six months from now, too.
A lot of the same big names decreased their holdings in Party City before the bankruptcy
Another key factor is at Friday's close Bed Bath is only worth like $211 million in market cap. Even a 20 bagger is only $4 billion. A 20 bagger from <$1 is only $2 billion in MCap.
For Bed Bath to go to $30 or $60 in the end requires some crazy fundamental thing, like perhaps Buy Buy Baby really does get split into its own stock, awarded to BBBY shareholders, and you get a Kodak 2020-style candle.
It's hard to say, but if you buy at 60 cents and it goes to $2.4 and you sell it all, who really cares?
Nobody except for Wall Street truly knows either what is going to happen or when it's going to happen.
But for now, it seems to me that the thing that will generate the most alpha for the MMs is to dump BBBY under its $0.88c ATL, probably while Nasdaq and the indexes feign beartown and volatility goes up.
This will cause capitulation from retail bag holders, because that's how retail does it, while the WSB brigade won't buy because they're not being told to buy.
Imo, this is the idea of everything going on right now.
So you can buy the really low prices. But there's a lot of risk. Maybe BBBY goes Chapter 11 and gets delisted and liquidated in receivership, though.
Life is hard and you lose a lot, no matter how you want to gain. You still lose a lot.
Buy a $0.6 handle and try to hold a winner to $30. I dare you.
Frankly speaking, holding a winner is really hard. In some ways it's a lot harder than holding a loser. The way to do it, though, is if you can bag some multiples, is to sell a portion equal to your risk and let the freeroll run until the entire market at large is showing the warning signs of a crash.
Then dump it all and never touch it again.
So, stay safe, lawyer up, hit the gym, and most importantly, delete Reddit.
