No Sale on Whole Foods

 | Aug 12, 2014 | 11:07 AM EDT
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Is it a takeover in Whole Foods (WFM) or an activist taking a position? Or is it someone playing "Bag 'em, Gun 'em and Liquidate 'em"? That's the ridiculous game where you buy calls and "get it going" to be able to foment enough interest to blow at the calls at a higher level.

I think it's probably the latter. I've taken heat before for trying to expose these tricks of the trade, from people who thought I used them when I was just furious at the people who did. There is a tremendous amount of interest demonstrated by aggressive call-buying, and Whole Foods is now having a second day of it after last week's run.

I think the idea of Whole Foods somehow being taken over is ridiculous. Co-CEOs Walter Robb and John Mackey would not be willing sellers, nor should they be, because it is only a matter of time before they get back on their game and raise same-store sales with the important customer-centric initiatives detailed on the call.

Plus, I have no idea how an activist would do a better job. Slow the expansion? Spend more money on advertising? Fire competent but expensive people? Nevertheless, the "Where there is smoke, there is fire" crowd is going to make it seem as if there is one so they can get out of their call positions at higher prices.

What makes me believe that it is no more than BGL (Bag 'em, Gun 'em and Liquidate 'em), is you are getting way too much buying in the soon-to-be-expired Augusts and not nearly enough in the out months. If you really wanted to play an activist or a takeover, would you really want to be that obvious? I don't think so.

Is Whole Foods undervalued? I think it is. But I see no catalyst on the horizon to turn it around with any speed. Of course, I could see a frustrated hedge fund taking a stake greater than 5% and demanding something happen.

I just don't know what's worth demanding!

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