Short City Update: Aeropostale, stopped out; Burger King, cover short

Posted Sep 17th 2009 1:00PM by Joseph Lazzaro
Filed under: Burger King Hldgs (BKC)

There are no sure-fire gains in trading or investing, even if the company's/sector's data is pointing to a move higher or lower. The short of Aeropostale (NYSE: ARO), recommended on May 15, 2009 at a price of $31, has been stopped out at $42, and the short of Burger King (NYSE: BKC), recommended on the same day at a price of $17.35, has failed to make the new lows envisioned.

Aeropostale posted record Q2 results, and recently announced a 9% increase in August same-store sales, despite a cluttered sector (young-teenager casual apparel, accessories), and the "frugal consumer" era.

Burger King's business model, meanwhile, of fast food in a nation that's getting back to nutritious, wholesome food consumed in original forms, still doesn't looking appealing. It's 1,750-store presence and sluggish sales amid challenging (at best) eatery conditions also looks a tad bulky; even so, the stock has meandered near $16-17 for four months, the risk/return for the short no longer looks promising, hence the cover short recommendation.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: Aeropostale, ARO, BKC, Burger King