The shares of Tiffany & Co. (NYSE: TIF) are taking a beating today, down nearly 3% at last check. Traders are reacting to news that Trian Fund Management L.P., under the helm of billionaire investor Nelson Peltz, reduced its stake in TIF from 8.5% to 6.9%.
According to a filing with the Securities and Exchange Commission, Trian sold 2.25 million shares on Wednesday and Thursday at prices ranging from $22.58 to $22.61 per share. Now, the fund beneficially owns 8.49 million shares of TIF.
Shares of the luxury retailer have suffered severely since October 2008, when they tumbled through support at the $30 level. The stock has shed 47% of its value during the past year. However, TIF is poised to finish the week atop its 10-week and 20-week moving averages for the first time since last September.
Despite today's less-than-inspiring news, it actually seems as though TIF may be ready to rebound. Pessimism is at near-peak levels, which reveals that the stock's lengthy slump may have finally found bottom.
For example, short interest represents a massive 19% of the equity's float, or roughly 6.5 times its average daily volume. Zacks reports that only two analysts out of seven consider TIF worthy of a Buy or better rating, and option traders on the International Securities Exchange have bought to open eight times more puts than calls during the past two weeks.
In fact, despite today's decline, TIF found an early intraday nadir near $21.80. This region has acted as support on an intraday basis throughout the week. With plenty of pessimism already priced into the shares, it's possible that Peltz might have slashed his Tiffany stake very near the bottom of the stock's slide.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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