With the second quarter nearly in the books and summer in full gear, it's the time of the year that market activity slows down, but there's no end to the situations and dynamics that make the markets so intriguing.
Lest you think the attacks on for-profit prisons were finished following U.S. Sen Elizabeth Warren's diatribe of late last week, other presidential candidates piled on in Thursday night's Democrat debate, most notably U.S. Sen. Kamala Harris. That came on the heels of Wednesday's announcement by Bank of America (BAC) that it no longer will lend to private prison operators following a review by the company's environmental, social and government committee. Seems like political grandstanding to me, and it follows JPMorgan Chase's (JPM) lead, which made a similar decision in March.
So, look for the volatility in shares of private-prison operators to continue. CoreCivic Inc. (CXW) , which yields 8.45%, is off about 14% over the past week, while GEO Group Inc. (GEO) , which yields 9.25%, is down 12%. Adept traders (which I am not) probably can find a way to make some money on all the volatility in what will be a politically driven story over the next year and a half.
Home meal kit provider Blue Apron Holdings Inc. (APRN) not surprisingly has taken it on the chin since announcing the terms of its 1-for-15 reverse stock split two weeks ago that went into effect on June 17; it's down about 28% since then. That decline includes Thursday's 10% gain Blue Apron enjoyed on more than three times normal average volume on no news, so it likely was due to short covering. On Tuesday, Morgan Stanley lowered its split-adjusted price target on APRN to $6; the stock currently is at $7.
On Thursday, specialty retailer Chico' FAS (CHS) , which has struggled mightily and has seen its shares fall nearly 60% over the past year, rejected Sycamore Partners' unsolicited buyout offer of $3 a share. No surprise here; in May CHS rejected Sycamore's offer of $3.50 a share after the company rejected an earlier offer of $4.30 a share.
If you are counting, that's a 30% reduction from Sycamore's first offer to its third offer, and in my view the board had no choice to reject the latest offer, if for no other reason than to save face and allow it some room to try and right the ship. Another busted retail story, of which there are many, but one to keep an eye on.
