Overstock.com, Inc. (OSTK) has a commercial with homeowners illustrating their comfort on sofas and bedding to the sound of The Partridge Family show theme. The voiceover sings, “Hello, world. It’s time to do some shopping and get comfy.”
Unlike the image portrayed by the commercial spot, Hedge fund JAT Capital has made things uncomfortable for Chief Executive Officer (CEO) Jonathan Johnson, II. The hedge fund was as plain as can be, stating, “The current CEO needs to be removed immediately.” (1)
JAT says they would be more comfortable with a board member. “Marcus Lemonis is clearly the most qualified person available to manage the business … he has offered to allocate time to the company, has bought stock, and has shown that he can communicate effectively with Wall Street.”
Lemonis has been buying OSTK since early October, accumulating 153,748 shares for more than $2.4 million. His most recent buy was November 1, 2023. He added 6,455 shares for a little under $100k. He was joined by another Director, Joeseph Tabacco who purchased 21,000 shares at $14.19, spending $298,011. (2)
It’s important to note that Overstock acquired the Bed Bath & Beyond brand and associated intellectual property earlier in the year. The company changes its corporate name to Beyond, Inc. effective November 6, 2023.
At the start of trading on November 6, 2023, the company will transfer its stock listing from the Nasdaq Global Market (NASDAQ) to the New York Stock Exchange (NYSE) and change its ticker symbol from OSTK to BYON and will continue to operate its furniture and home furnishings ecommerce business under the Bed Bath & Beyond brand. (3)
While Lemonis’ recent OSTK activity is new, Tabacco has been comfy buying and selling the retailer’s stock for major profit. From March 2019 to March 2020, he accumulated 80,000 shares in four transactions, eventually investing $692,120.
He started selling OSTK in January 2021. It was the first of three sales between $81.63 and $95.48 per share. All out, he sold 65,000 shares and banked more than $5.6 million. Shareholders that are shopping now would surely be comfy if Tabacco repeated his performance.
Wall Street believes he could more than double his money from the most recent buy. The street has a one-year price target of $34 for the soon-to-be BYON. (5) The stock trades at $16.78 as we type. Analysts don’t expect the new company to make a profit this year or next; however, sales could be headed for a rebound. The top line is projected to slide 17.4 percent this year but increase by more than 6 percent in 2024. (6)
OVERALL: Although we would much prefer BYON to be profitable, shares could stabilize as sales stabilize. From our experience, there will be potholes as the two companies merge into one. However, investors and Wall Street love turnaround stories. If/when the combined companies show reforms, efficiencies, and are about to turn losses into profits, BYON could prove to make good on the “It’s time to do some shopping and get comfy” jingle.
Beyond (BYON) is only appropriate for investors with the highest risk tolerance and a timeframe of at least two years.
Rich Meyers
1 – https://finance.yahoo.com/news/hedge-fund-jat-calls-overstock-172224910.html
2 – https://www.secform4.com/insider-trading/1130713.htm
3 – https://investors.beyond.com/news-events/press-releases/news-details/2023/Overstock-Heads-into-the-Future-as-Beyond/default.aspx
4 – https://www.secform4.com/insider-trading/1403544.htm
5 – https://finance.yahoo.com/quote/OSTK/press-releases?p=OSTK
6 – https://finance.yahoo.com/quote/OSTK/analysis?p=OSTK