Nordstrom | $JWN Stock | Shares Soar On Going Private Speculation

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Nordstrom, Inc. (NYSE: JWN)

 

Shortly after the market closed for trading on Tuesday September 12th , Nordstrom released a statement indicating that the family is nearing a deal to be taken private and no longer be a publicly traded company on the New York Stock Exchange.

As soon as it was released shares soared higher closing in the after hour session up nearly 10% at $49.50 which was up $4.45 in the after hour period. During the regular trading session shares traded between $44.66 and $45.97.

What makes this interesting is that there is a pretty substantial short interest of 24% outstanding. Short interest is the percentage amount of shares that have been sold before they have been actually purchased. This process, or action of short selling, is usually done by “short seller traders”, “hedgers”, and “speculators”.

They basically are betting that the share price goes lower short-term rather than higher short-term. In some instances this practice is also used longer-term when speculators are betting that a company made file for bankruptcy and ultimately go out of business. At Nordstrom’s average trading volume, this could take 13 days for the shorts to cover their positions.

This is the kind of situation that can send the stock soaring higher and higher as the shorts need to cover or receive large margin calls. On top of this huge short interest, the company pays a fairly hefty dividend of 3.2% per year. Shares have traded in a 52-week range from a low of $39.53 to a high of $62.82. During the regular trading session shares closed at $45.03 or up +0.33 on the day.

The Players

Leonard Green would provide up to $1 billion in financing for the founding family, which owns 31% of Nordstrom (JWN) shares, CNBC said, citing sources. The family has been seeking bank financing while the retailer has set up a special committee to evaluate any offer.

Nordstrom is a 116 year old company, with roughly 350 stores in about 40 US States.They compete with the likes of Macy’s, Saks Fifth Avenue,Lord & Taylor, to name just a few.

Nordstrom Charts

Nordstrom

The above price chart shows the intraday trading action on Tuesday to the left, and the after-hours session on the right. It is clear to see that in the after hours session exactly when the news was released and the positive buying reaction ensued.

Nordstrom

The above price chart shows the daily trading action going back roughly 5 months. It is easy to see in the chart the upper red horizontal resistance line and  the green support line below that the stock price has basically stayed within for that time frame.

From the looks of things, it seems as though the share price will open on Wednesday morning right at about that upper red horizontal resistance line. Many eyes of traders and investors will be on this stock at the open to see if the market feels that the shares should be higher priced or lower-priced.

Company Profile

Nordstrom, Inc., a fashion specialty retailer, provides apparel, shoes, cosmetics, and accessories for women, men, young adults, and children in the United States and Canada. It operates through two segments, Retail and Credit.

The Retail segment offers a range of brand name and private label merchandise through various channels, including Nordstrom branded full-line stores and online store at Nordstrom.com; Nordstrom Rack stores; Nordstromrack.com and HauteLook; Trunk Club clubhouses and TrunkClub.com; Jeffrey boutiques; and clearance stores that operate under the Last Chance name.

The Credit segment provides access to various payment products and services, including a Nordstrom-branded private label card, two Nordstrom-branded Visa credit cards, and a debit card. As of June 30, 2017, the company operated 354 stores in 40 states, including 122 full-line stores in the United States, Canada, and Puerto Rico; 221 Nordstrom Rack stores; 2 Jeffrey boutiques; and 2 clearance stores, as well as 7 Trunk Club clubhouses. Nordstrom, Inc. was founded in 1901 and is based in Seattle, Washington.-YahooFinance

 

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