Ka-Ching: The Bed Bath & Beyond Cash Out Begins

After an insane few weeks in which its stock quadrupled, the sell-off of Bed Bath & Beyond shares has begun.

Let the profit taking begin.

Late Wednesday after the market closed, activist investor Ryan Cohen and his RC Ventures filed “for the right” to sell his 9.45 million shares of the company, including 1.67 million shares that were part of call options he only bought earlier this week.

Representing close to 12% of the total outstanding shares of the troubled big box home furnishings retailer, Cohen’s payday could be as much as $235 million depending on when the sell order is placed.

Earlier this week, another financial company that had bought a stake in Bed Bath more recently seemed to indicate it too has sold off its shares. In a 13G filing that BBB disclosed on Aug. 16 FCM BBBY Holdings, whose “sole member” is listed as Freeman Capital Management said it no longer owned any shares in the retailer. It had bought about a 6% stake in early July and suggested that the retailer needed to raise working capital as it tried to straighten out its business.  

Neither investor offered any further information on their actions.

All of this sell-off comes as Bed Bath has been caught up in a Wall Street maelstrom of historic proportions, its stock skyrocketing to as high as $30 earlier this week in astronomical trading. With only about 80 million shares outstanding, close to 400 million shares traded hands just on Tuesday. (Average trading had barely broken 8 million shares a day before all of this started.) Overall the stock price was up 349% over the 14-day period ending Tuesday.

As of Wednesday afternoon all of that appears to be crashing down. Its stock closed at just over $23 a share and an hour after the market closed it was down to $18.37 a share, representing almost a 30% nosedive since Tuesday’s close. Caught up in the meme-driven hysteria of day-traders combined with short sellers trying to cover their bets and institutional traders trying not to get caught flatfooted, the stock price has defied dire predictions from stock analysts and the company’s own miserable financial performance. Its sales dropped 23% in its most recent quarter, continuing a strong of declines that resulted in the firing of its CEO and chief merchant. Under interim leadership the company has promised details on its recovery plans, but those appear to be caught up in the stock hysteria too.

By Thursday morning, the situation with BBB could have turned around again given the volatility of the situation. To state the obvious, what’s going on is Beyond comprehension.

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