Sunday, October 6, 2013

BKS begins its climb to world dominance?

As behavioral finance teaches us, even our blind spots have biases with additional blind spots. This is a good thing for the stock picker in a sideways market because the institutional investor herd is prone to react to an ever changing set of fears, rumors, scenarios, etc. There is a lot of sector rotation, jumps in and out of emerging markets and hot stocks, until finally, looking back, it is hard to distinguish much real change. With all the current anticipation of news on interest rates ("tapering") , federal budgets, and debt ceilings, occasionally a situation does jump out as truly reflecting a change in a company's fortunes. As an example, Barnes and Noble (BKS) shares jumped on Friday (October 4) over 10 percent on high volume.  As there has been no real news from or about the company for weeks (other than a late September Goldman price target of $17) I would suggest that this is a sign of a shift in the realities of book selling occurring just as company architect Len Riggio returns to run things. He built it once and given BKS's near-monopoly position in the US bookstore world, should be able to expand with stores in both smaller US communities and under-served retail environments in Europe and Asia.

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