Two Ways To Play: Macy's Gets a Little Credit-Minyanville

Two Ways To Play: Macy's Gets a Little Credit

Terry Woo Dec 17, 2008 4:51 pm

Two Ways To Play: Macy's Gets a Little Credit


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Macy’s (M) posted its biggest per-share gain in 17 years today. According to Bloomberg, the move came after the second largest department store in the US was able to renegotiate a bank-credit agreement with JPMorgan Chase (JPM) and Bank of America (BAC).

Macy’s credit facility is still at $2 billion, and the maturity date and size of the facility remain unchanged. The facility also is also still untapped, but it gives the company flexibility; investors are now more confident that Macy’s will be able pay off its $950 million in debt, which will mature next year.

Of that amount, $350 million is due in April and $600 due in July. Wall Street was previously concerned that Macy’s wouldn’t be able to meet its obligations as cash flows fell due to dwindling sales.

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Macy’s shares finished the session up 18%, to $10.01.

From the Bull Pen: Macy’s performance today is a prime example of pressing shorts in the retail sector when armageddon seems to be priced in. The stock recapturing its 50 DMA is a healthy sign. A conservative approach would be to wait and allow the markets to digest this move. Bulls can also consider Decker’s (DECK); sell stops can be set 2 points from entry.

From the Bear Cave: Bears can consider a downside play in Under Armour (UA). The tape remains skewed to the upside, but one can consider testing the downside if it can reach $30 resistance.


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Frank Mont

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12-17-2008, 5:27 pm
How is borrowing from JPMorgan Chase and Bank of America paying off debt? Isn't this Ponzi finance. Shouldn't the dept be payed off with operating earnings? Read More


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