Traders Eye Key New Stakeholders for Bank of America, Hain Celestial

Berkshire Hathaway confirmed it will exercise warrants to become the biggest BAC shareholder

Managing Editor
Jun 30, 2017 at 10:39 AM
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U.S. stocks are mixed this morning, with traders taking a tentative approach ahead of a holiday-shortened week ahead. Among specific names on the move today are retail stock Destination Maternity Corp (NASDAQ:DEST), financial firm Bank of America Corp (NYSE:BAC), and organic foods manufacturer Hain Celestial Group Inc (NASDAQ:HAIN). Here's a quick look at what's moving shares of DEST, BAC, and HAIN.

Destination Maternity Slides as Merger Partner Swings to Loss

Destination Maternity stock is down 28% to trade at $3.35, after the company's merger partner, France-based Orchestra Prémaman, swung to a fiscal-year net loss. The two companies announced their merger in December. Today's drop for DEST stock reverses a modest recovery from April's eight-year low of $3.18, and continues a longer-term downtrend that's been in place since last November's peak at $8.42.

Amid the equity's short-lived rally into early June, DEST shorts largely exited their bearish bets; short interest decreased by nearly 28% during the reporting period ended June 1. Due to today's big sell-off, DEST stock is currently short-sale restricted.

Buffett Buy-In Sends Bank of America Higher

Bank of America stock is up 1% to trade at $24.59, after Warren Buffett's Berkshire Hathaway confirmed it will exercise warrants to acquire 700 million common shares of BAC, becoming the largest shareholder of the bank giant in the process. Berkshire will hold an ownership stake of about 7% in BAC, which earlier this week received Fed approval for a dividend hike.

BAC is now up roughly 88% year-over-year, but short sellers are targeting the Charlotte-based bank. Short interest has increased by 33.7% during the past two reporting periods, and the current accumulation of 131 million shares sold short is the most since mid-December 2016.  

Activist Stake Sends Hain Celestial Stock Higher

Hain Celestial stock is up 8.5% to trade at $38.96, after activist investor Engaged Capital disclosed a 9.9% stake in the organic food stock, and said it will work with the board to create shareholder value. Today's bull gap is a change of pace for struggling HAIN stock, which fell to a four-year low of $31.01 as recently as June 23 -- but is now trading above its year-to-date breakeven level for the first time since early February.

Options traders have loaded up on HAIN puts in response to the bleak price action this year. HAIN's Schaeffer's put/call open interest ratio (SOIR) of 0.77 sits in the 96th percentile of its annual range, suggesting short-term options players have rarely been more put-skewed during the past 12 months. 

 

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