Heckyl Alpha Pulse

Looking Beyond Headlines: The case of American Apparel Inc.

Posted on July 22, 2014 Updated on January 16, 2015

In our last post, we took the case of VW with Fiat and shared how, when alerts provided ahead of the crowd, they can help interested investors generate significant alpha.
Following on from that post, we wanted to expound on the opportunities that can be harnessed from open data sources of information.

An open data source is information and data readily available for public reference. These are under government domain or those such as government data sources.

The mining of Social Media is a key area at the moment – and one that, when utilised correctly, can provide invaluable insight and fast breaking news. However, when coupled with information from other open data sources and analyzed together, it becomes a far more powerful tool.

Taking the recent events at American Apparel (NYSE:APP) as an example the @HeckylFIND platform provided the following alert on 19th June:

Dov Charney: American Apparels Inc CEO is suspended from the Board and CEO position, on allegations of Sexual misconduct

The article mentioned that Charney still held a 27% stake in the company and was the majority shareholder. More news followed over the next few days.

22nd June: ‘Reinstate me or I’ll sue’: American Apparel’s Dov Charney vows to win company back after being fired:
22nd June: American Apparel board rejects demand to meet Charney: source

For those interested in this kind of development, FIND allows users to ‘follow’ a company and be alerted as events unfold. It also provides more than just news alerts, allowing users to dig deeper into a company, and connect the dots by utilising numerous data sources.

By 24th June as the headlines kept coming thick and fast, the share price had reached 53 cents. Users doing more than just reading the headlines and following the company would have noticed on the FIND platform that Dov Charney was in the process of buying up shares, as was the Hedge Fund ,Standard General.

The buying lead to a 30% rise in the share price in the last few minutes of trading: The following news then reached the market.

27th June: American Apparel unveils poison pill plan

By 1st July, Charney had increased his stake to 42.98% and on the 3rd July he handed over the voting rights to Standard General. By 8th July it was confirmed that Charney and Standard General had reached a deal and APP was trading at $1.17 by the close on 11th July. This was in line with a Broker Recommendation ( information that was also available through Heckyl FIND).

As the title of this post states, ‘Looking Beyond Headlines…’, users can get empowered to make investment decisions if they are able to consume such news and information the way it is meant to be.

Over the coming weeks we will be posting a series of examples of ‘Breaking News’ on Social Media, Sentiment Tracking and examples with broader perspectives of connecting open data sources, to help generate Alpha.

We hope you find these useful .For any questions or comments and even feedback, please reach out to us at info@heckyl.com .