As we headed to our extended family's Christmas Eve celebration on Tuesday, I wondered how quickly and how frequently I'd be asked about what was happening in the markets. As the only family member involved in the industry, I figured it would be a long night of shop talk, which I really wanted to avoid; there are more important things, after all, especially at this time of year.
I was pleasantly surprised -- just one query about the markets, from someone who is still upbeat. On Christmas Day, however, the one person who has the least interest in all things financial, my dad, was the one who asked the question along the lines of "when do you think the markets will reverse course?" That was a bad signal to me. I've always admired my dad for not being obsessed with P/E ratios, price-to-book values, etc -- the way I am -- and for him to ask that question means that negative sentiment may be starting to jell among the masses.
Friday's action was interesting in many ways. While most of my screen was showing red, the few names that were green were not those I would have expected. That included a handful of specialty retailers, all of which are included in my 2019 Double Net Value Portfolio. Big 5 Sporting Goods (BGFV) , one of the specialty retail names I held onto too long, was up 8%. The name topped out near $9 in June, but has been decimated ever since.
Fashion retailer Cato Corp (CATO) -- which has been a round-tripper this year; starting the year in the $13 range, rising to $26 in July, then heading back down to the $13 range, where it currently sits -- was up 2%. Now, that may not seem like a stellar day, but it is when the rest of the markets are getting hammered and you are in a struggling industry. Perhaps markets are recognizing that the company has $210 million, or nearly $9 per share, in cash and short-term investments on the books, putting a floor in the stock.
Even Vera Bradley (VRA) , which took it on the chin two weeks ago after reporting a third-quarter earnings miss, managed to rise 1%. VRA ended the quarter with $3.75 in net cash and closed Monday at $8.15.
Elsewhere, net/net Richardson Electronics (RELL) was up 4%. The company has strung together four consecutive profitable quarters and was approaching the $10 level in late July, a four-year high, before falling to the current $7 level. RELL ended its latest quarter with about $4.20 per share in cash and no debt, and currently yields 3.4%.
One of the interesting facets of Monday's action was the performance of small markets overall. On a day that you might have expected the damage to be far worse for small names than that of the S&P 500 (-2.7%) and DJIA (-2.9%), both the Russell 2000 and Russell Microcap Indexes held up fairly well, down 1.9% and 1.4%, respectively. Of course, both are in bear market territory already, down 25.1% and 26.7% for the quarter.
