Close Out POST Put

By Linda McDonough • February 3, 2017

Sell to close the February 17, 2017 put on Post Holdings (POST) with a strike price of $85.00 at $3.00 or higher: Symbol (POST170217P85)

Sell POST puts for a slight loss. Although several trends in the quarter confirm my bear case, I don’t think they are robust enough to send the stock lower before the February expiration.

Post reported a mediocre quarter. Although the headlines read of a 7 cent beat, the quarter was marred by several very large one time charges management had not warned about. In addition, cash flow dropped significantly even after adjusting for the one time charges.

That said, cereal sales were up slightly year over year and profit margins slightly better. Although management warned that the second quarter would be the lowest of the year and that this quarter was boosted by increased promotions investors don’t seem worried about this issue.

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RT

02/03/17 ‐ 2:47pm ET February 3, 2017 at 2:47pm ET

It doesn’t look like that put is going for more than $2.25ish, today. Do you think we should take that or hold for closer to 3 for a few more days? Dr Fink is expecting the rest of Feb to be primarily bearish, in general.

Do that analyst voodoo and get back to me…organic chickens only. I won’t hold you to it, just would like your best guesstimate…

RT

02/03/17 ‐ 3:33pm ET February 3, 2017 at 3:33pm ET

Sorry, I meant $1.25c at present…

Linda McDonough

02/03/17 ‐ 4:14pm ET February 3, 2017 at 4:14pm ET

It would be so nice if I knew exactly where the stock would close next week- We’d all be abundantly rich! That said, today is an incredibly strong day in the market so it’s likely the stock takes a breather next week. Its soggy action this morning despite the big headline beat is encouraging for the bears.
Best,
Linda

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Linda McDonough

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Linda McDonough is a veteran hedge fund analyst who loves to break down company financial statements and identify market inefficiencies to uncover big opportunities. She believes in a boots-on-the-ground approach that includes surveying customers, interviewing company executives, or doing whatever it takes to see what others don't.

She's now brought her experience as a hedge fund analyst to subscribers of her Profit Catalyst Alert service. Her system identifies small- and mid-cap stocks that are about to move due to catalytic events that few others can identify...until it's too late. These events often times result in massive gains for her followers.