Summary
I share my latest thought process surrounding the news GNC has delayed its Q3 2018 earnings by 9 days.
GNC now has three out of the four critical Chinese approval for outbound Chinese equity investment.
I discuss and share the law paper by Norton Rose Fulbright (written by Yi Wang) that concludes that "SAFE", at least during normal times, is more of a formality.
This idea was discussed in more depth with members of my private investing community, Market Adventures. Start your free trial today »
Today's piece marks the first time, in about seven weeks, I have written about GNC Holdings, Inc. (GNC) on SA's public site. For context, and in case anyone is wondering, I continue to maintain a large bet in the name with a cost basis in the high $4s in my High Octane Portfolio. That said, I must admit, the volatility in the name continues to surprise me as it appears the buy side is mostly on the sidelines awaiting the final approval from China and official closing of the Hayao deal. As a result of the buy side taking a wait and see approach, the shorts have continued to whipsaw the large retail GNC shareholder base. Before I discuss my thoughts on GNC Pittsburgh pushing out its Q3 2018 earnings date from October 31st (before the bell) to November 9th (after the bell), I do want to discuss this whipsaw action, as it, at least in my view, has the signature of the shorts written all over it.
On October 23rd, at the intraday lows, the S&P 500 was down 2.34%. However, GNC's stock was showing impressive resilience and at one point was up over 5% at around 12:30 pm. Then, out of nowhere, the stock gaps down $0.30 (see below). Enclosed below is the Fidelity 1 minute chart. Traders then go onto buy the dip and then the stock briefly spikes around 3:30 pm to a new intraday high of $4.46. However, that was short-lived, and the stock is met with big sell blocks and once again gaps down $0.25 in a very short period of time. And in case you were wondering, there was no news, at least on any public wires, to drive this type of price action.
