True Religion Brand Jeans,TRLG, broke above $17 today. We’re finally returning to the levels we reached back in August, before the stock was listed on the Nasdaq. My first purchase was at $4.95 in November of last year. I have been steadily purchasing more as the stock has appreciated in value over that time, and is now, by far, my largest holding.
I personally view this company as one of the greatest growth stories out there right now. Management has consistently delivered, and has even over-delivered on their promises to shareholders. Consider this: In the company’s conference call in February of 2005, I believe management stated they expected to make $.55/share. When all is said and done, I think they’ll make a little under $.90/share this year.
Now past performance is one thing, but future prospects is the reason I’ve kept on buying more. The company recently opened its first store in Manhattan Beach, and plans to open 3 more stores in Las Vegas, New York, and San Francisco during 2006. The company is going to enter into between 10 and 20 new countries this year. They are also expanding their products selection and plan to enter into 2 new licensing agreements in 2006.
There is a huge short interest in the stock. Over 4 million shares short as of November 15th. Although the company has been on the SHO list for over 2 months straight, it has begun to climb incredibly. I think that at this point, we are about ready for a short squeeze. And it is for this reason that I think we could see $20 before the end of the year.
One thing to note is the insider selling of Lubell. He announced his plan to sell approximately 12% of his stake for an average price of $17.90 per share, selling no more than 300,000 shares per quarter. If you notice, he hasn’t sold anything since the stock has come back from its recent low. In fact, the board of directors have recently begun their buying of the stock at around 15.50. I feel this is a very bullish sign, and asserts management’s belief in the company.
Until management does not deliver on the promises they make each quarter, I will continue to hold my shares. Their track record has been very good so far, and I believe we are at the starting line of the next Diesel, Lucky Brand, Coach, Guess Jeans.
Along with the shares of common stock, I also own January $15 calls as well as January $17.50 calls. Depending on where the stock closes today, I will determine what I will do with the $17.50 calls.