On October 10, 2012 we posted our bullish outlook on Safeway: Safeway – Double Coupon Special – $SWY Last week the stock traded above 17 and looked like it was going to fill its July 2012 downside gap but it failed.
We believe this market likes to punish the obvious, and the failure left momentum chasing new longs trapped, and brought back in the short sellers.
We came across the note below at The Motley Fool; looks like we are in good company.
Bridgewater increased its holdings of Safeway (NYSE: SWY) by about a third to make that the second largest stock holding by market value in its 13F portfolio. The trailing and forward P/E multiples at these two companies all come out to 8x, which normally represents value territory. Both stocks also pay dividend yields of about 4%.
Safeway’s current short interest is 77,110,275 which is 30% of the float and 15.68 days to cover.
That is a crowded trade.
Disclaimer: This communication should not be construed as an offer to sell or the solicitation of an offer to buy any security. (Click here for full disclaimer)