We Purloin BIG Coin — 633% and 63%! Then… The Ploy to Destroy HELEN OF TROY: Nothing But A Mama’s Boy Decoy! (HELE, AES, IAS)

In setting up this week’s trade, we were reminded of the trickery of the Greeks, their fondness for theater and surprise, and the intrepid and valiant nature of their early warriors.

Yes, indeed… what the hell happened to the Greeks?

Anyway, it’s Helen of Troy (NASDAQ:HELE) against whom we’re launching a thousand ships today, in an effort to secure a potential purse of 4900%.  Which, in our view, is a better take than any old, pretty face.

HELE makes food preparation tools and gadgets under the OXO Outdoor, Osprey, PUR, Honeywell and Braun labels, and cosmetics under the Revlon, and Bed Head brands.

But lately they’ve been known primarily for stock weakness.

But… but… she’s so beautiful!

Why the bout of financial flaccidity?

Well, it’s primarily to do with debt.

The company took on a goodly portion of variable rate loans that they’re now stuck servicing as rates rise.

To put that into perspective, last earnings report saw the company’s Interest Expense rise from $4.4 million a year ago to close to $14.1 million in their latest report.

That’s a debt “gain” of $9.7 million (+220% Y/Y) during a period when the company’s debt SHRUNK by $260 million!

We’ll continue with the HELE trade in a moment.  But first, we’ve got two to close for big gains.

The first is our AES bet from May 18^th.  The letter was called Watch AES Get Charred, and it recommended you sell the AES August 18^th 21/24 CALL spread for $0.95 and buy the AES August 18^th 21/18 PUT spread for the same $0.95.  Zero Premium was the result.

And now…?

The long 21 CALL can be repurchased for $0.10*, while the PUT spread can be closed for $1.20 (1.30/0.10).

Get it done, and you walk with $1.10 NET on NOTHING spent.  Adjusted for minimal commissions leaves you with a mighty fine 633% in less than 90 days.

And that’s a battle worth waging.

*Leave the long CALL open.  Who knows, it may be worth something before expiry.

Our IAS trade arrived at your inbox on June 23^rd in a missive entitled Measure for Measure, The Evil Ones Will Earn Their Just Deserts.

We urged you there to sell the IAS October 20^th 17.50 CALL for $2.10 and buy the IAS October 20^th 22.50 PUT for $5.70.  Total debit on the affair was $3.60.

And…?

Today, the CALL can be repurchased for $0.65 and the PUT relinquished for $6.50.

Do it, and you NET a sizeable $2.25 on $3.60 laid out.

Percentage-wise, it’s “just” 62.5% (in TWO weeks!)—but sometimes the dollar figure means more.

Bank it!

And now, on to the loveliest of all—Helen!

The plain numbers look like this—

• P/E is 23.36, and consensus is that one year from now that multiple will be halved (almost) to 13.33.  Halved.
• Ain’t no Dividend, and…
• Price to Book is 2.17.
• EPS FELL this year by 35.10%, while…
• Latest Q/Q Sales and Earnings also FELL by 6.60% and 8.20%, respectively.
• The only worrisome item is the short float, which has been growing for a while and now amounts to a mammoth 22.67% of the outstanding shares.  Were there to be a squeeze, the stock would fly.  Will it happen?  Less than likely.  See below.
• As mentioned earlier, the debt issue is where shareholders are focused—as they should be—because it’s not a problem that’ll suddenly disappear.

Here’s the chart—

Patience, good Jews and Noahides.

That’s always the key.

We’re laying bricks here…

Not swinging for fences.

May G-d help us build a Fenway-like wall of profits!

Green, green, green…

With kind regards,

Hugh L. O’Haynew

Follow @HughLOHaynew