In a previous post I had mentioned FHHI and how I took advantage of the reverse merger arbitrage opportunity that existed. After completing the arbitrage transaction, I studied the company further. Fashion House is in the shoe making business. What I like about the company alot, is they’re partnered with already established brands: Oscar de La Renta, Richard Tyler, and Bill Blass to be exact.

I had met with the CEO a couple of months ago, and I was thoroughly impressed. He wants to grow the company, and I think he will be able to do so effectively. Using multiple brands and lines, he will be able to penetrate all price points. In the Fall, the company introduced 1 Richard Tyler line as well as 1 Oscar de La Renta line. In just a couple of weeks, February 10th, the company will be introduced 1 more Richard Tyler line, 1 more Oscar de La Renta line, and its first Bill Blass line.

The most exciting thing about this company, is that although it is relatively young, there is no brand name that needs to be built. The brand names have already been established not only with vendors, but with the public as well. This will make it easier for the company to increase its door count much faster, as relationships have already been established with each company’s clothing lines already.

With approximately 18 million shares outstanding at the moment, the company will grow into its valuation fairly quickly, and could see anywhere from $3 to $5 a share within the next 18 to 24 months. When speaking with the CEO, he had told me that ultimately he would like to pursue a listing on a major exchange, and that he already has small, high quality companies on his radar screen that he would consider as acquisition targets in the future.

I am very bullish on the stock. In the past 2 days it has jumped approximately 60%. At this point I would probably wait for a small pullback, although its not guaranteed, but I am still considering buying at these prices. I will be attending the company’s exhibit in Las Vegas for the unveiling of its new product lines and will have an opportunity to meet with the CEO at that point. If anybody has any questions they would like me to ask him, please let me know.