Investor Shakeup Launches Big Lots Stock Higher

This comes right on the heels of BIG's massive post-earnings plummet

Assistant Editor
Mar 6, 2020 at 11:31 AM
facebook twitter linkedin

Big Lots, Inc. (NYSE:BIG) is up 10.6% to trade at $18.37 after two activist investors announced an 11% stake in the company, with plans to overhaul the big box retailer's board, adding that they have already nominated nine people. The investors, Macellum Advisors and Ancora Advisors, said in a joint statement that the "company has been hampered by a Board that lacks relevant skill sets, has pursued poor capital allocation strategy, and rejected credible offers to monetize Big Lot's real estate assets."

Since suffering a post-earnings plummet and subsequent 11-year low last last Friday, Feb. 28, the shares have been inching higher, up 9.5% this week, with support emerging just north of its closing low at the $16 level. The equity has a ways to go if it wants to close this late-February bear gap though, and for the year, BIG still suffers a 36.1% loss. 

This aforementioned earnings report sparked a tidal wave of bear notes, putting the consensus 12-month price target at $20.86, which is still a solid 12.5% premium to current levels. Meanwhile, seven members of the brokerage bunch consider BIG a "hold" or worse, while just one calls it a "strong buy." 

In the options pits, calls are being favored. BIG stock sports a 10-day call/put volume ratio of 8.81 at the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 87% of readings from the past year. It's possible that a lot of this call buying could be shorts seeking an options hedge against any upside risk, though. Short interest rose 9.1% in the last two reporting periods and now represents a healthy 21.1% of the stock's available float, or nearly a week at BIG's average pace of trading. 

Begin the New Year With Schaeffer's 7 FREE 2022 Stock Picks!



Special Offers from Schaeffer's Trading Partners