Plunge Post-Earnings Announcement
In early September, as the news of Toys "R" Us filing for bankruptcy broke, I wrote an article discussing the implications of the development on Hasbro (HAS) and Mattel (MAT). In it, I said:
"... the charts suggest that technically the share price of Hasbro could still weaken further. Based on the multi-year price channel, the share price of Hasbro could touch the bottom of the channel at ~$89-90 before rebounding. It could turn really ugly if the shares breach the support line convincingly."
Nevertheless, after having done my due diligence, I decided at the $93 level, it was already good value and entered my first position into the counter. I have shared my thoughts in the article titled Hasbro: Value has emerged. I reckoned then that it would not be wise to wait for a $3 drop (to $90 - bottom of channel) which might not happen but possibly miss out on a potential $25 gain (if I missed the proverbial boat and the share price subsequently hit the upper channel at ~$118). Alas, the share price indeed touched the bottom of the channel at $89 yesterday before rebounding. While there is the opportunity cost in being two months early, in addition to the higher price paid, I did not regret the purchase as I was comfortable with the entry price. I am consoled by the fact that even Warren Buffett is known not to be able to "catch the bottom".
