Sell Alert: Michael Kors (KORS)

By Jim Pearce • January 13, 2017

TRADE INSTRUCTIONS
Date: January 13, 2017
Name: Michael Kors Holdings Ltd.
Symbol: KORS
Type: Close
Limit: Sell at market

TRADE RATIONALE
We have reached the end of the three-month target holding period for this trade. I seriously considered extending this holding another month to encompass KORS’ next quarterly earnings report scheduled to be released the first week of February, but there are two mitigating factors that have convinced me to close it out at a small loss.

Fist, the retailers have taken a beating over the past week after Macy’s and Kohl’s reported disappointing holiday sales figures. Combined with a story earlier this week that KORS and other luxury apparel manufacturers have cut back on their product lines, the entire retail sector is in the doghouse and is not likely to be let out until there is empirical evidence of its recovery.

Second, there is the persistent rumor that KORS may be preparing to make a buyout offer for Kate Spade. That may be good for KORS in the long run, but will most likely be dilutive to earnings in the near term. I doubt KORS will make such an offer since the total acquisition price for KATE is estimated at $3 billion, which far exceeds KORS cash holdings and would force KORS to either significantly dilute the value of its stock and/or increase its long term debt substantially, but the fact of the matter is the rumor is out there.

Yes, this is a bitter pill to swallow since we had a modest gain in KORS shortly after issuing the buy alert in October, but sometimes discretion really is the better part of valor so I am shutting it down.

Stock Talk

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01/15/17 ‐ 4:33pm ET January 15, 2017 at 4:33pm ET

Different members will likely have success or not; in various trades for a number of reasons. I am not bragging here to be sure just reporting how it worked for me; I can say this as a guy who has missed out Plenty of times. I got in on day 1 and exited on 11/1 I entered a position in my taxable account and my IRA. My combined profit in both of these accounts was $1090. I am happy that Jims method is to give us a guideline for profit; but never criticize if we have our own reasons for exiting which could vary for different people. In my case It was Nov 1,I was perusing my charts the days candle was above the upper Bollinger Band, and the vertical line was growing at the top which indicates selling is occurring. So no apologies required for me Jim; but I think you are doing the right thing in general. Keep in mind Folks a different year I was “Swinging for the Fences” on Kors, made a mistake and got another 5 contracts I did not mean to. So I am telling members this because it can easily be the case we have a goal, we really want to ‘win’, but a cooler head and money management may save the day in reality. Don’t expect to be a hero. Here is a phrase from Tasty Trade who now has their own brokerage firm; “Trade Small Trade often”.

Michael Sessions

01/15/17 ‐ 6:27pm ET January 15, 2017 at 6:27pm ET

Re your Systematic Wealth program, I follow it and invest in most of the ideas you put forth BUT…

There are a number of your recommendations (unfortunately all of the ones I am in) which have mot moved as you thought they would and this concerns me as your stop loss points are too far away from the recommended purchase points as to offer little realistic protections. I realize that you set a time frame to give a reader some idea of how long to wait BUT…

I believe that you owe us an update on all of your outstanding recommendations at least twice a month, if not weekly.

How about it?

Jim Pearce

01/16/17 ‐ 3:58pm ET January 16, 2017 at 3:58pm ET

Hi Michael. I’m sorry you haven’t participated in our profitable trades yet, but we have had several so the service is working as we intended from an overall perspective. In addition to the monthly summary, I update holdings when there is relevant news – usually in the Stock Talk feature below the most recent alert or article on each one – which I feel is more helpful than issuing updates on a fixed schedule even when there is no news (you can enter the name or symbol of a stock in the search box in the upper-right corner of this page to see a list of recent articles and stock talk comments on a holding). As for stop losses, each position is intended to be held for the full length of its target holding period barring a collapse, but they are not intended to assist with more sensitive trading strategies such as options (we did close some positions prematurely in November and December after the post-election rally since we achieved our annualized ROI objective much quicker than anticipated, but that was a highly unusual event). Thank you.

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