Watch List Weekly – Talking OTTR, VITL, SVV, HIMS, GFL
Also a look at how the Red Flag Alerts List is holding up.
(This friendly reminder: My Red Flag Alerts and selected On the Street content are no longer free. But while the paint is still drying on my paywall, my introductory price remains. I will be raising prices. Here’s more on who I am, why I’m charging and what you can expect from On the Street and from my Red Flag Alerts.)
As my vacation continues, greetings from Marrakech ...
I’m taking this break from my break during what surely was one of the weirdest weeks for the market in a very long time – driven by thematic, flows-based and some of the most irrational trading ever – to give a few brief updates on several red-flagged names that reported or had other news last week. They include…
Otter Tail OTTR 0.00%↑.
Vital Farms VITL 0.00%↑.
Hims & Hers HIMS 0.00%↑.
Savers Value Village SVV 0.00%↑.
GFL GFL 0.00%↑.
I’m also including an updated Red Flag Alerts list. I want to stress that this is not a coverage list, but instead a complete list of names (win, lose, draw) I’ve red-flagged since launching the list in May of last year. If nothing else, this list serves as a good proxy for how stocks that have stoked concern – and at times, emotions – do during various markets. (Hint: While several stocks have soared in recent weeks, the list has surprisingly held its own.)
Before we get going, two stocks that deserve special mention are Otter Tail and Vital Farms.
You’ve Been Served
First, on Otter Tail: In addition to reporting earnings, which I discuss lower in this report, behind the paywall, the company disclosed last week that it has received a subpoena from the Justice Department regarding price-fixing of PVC pipes. While its best known as a Minnesota utility, Otter Tail also manufactures PVC pipes, whose ultimate end market is largely municipalities.
As I originally reported, the price-fixing allegations were originally made by the anonymous shortseller, ManBearChicken. (Silly name, yes, but serious allegations.) You can read my original report (open to all subscribers) here…
Some stories fall through the cracks of coverage just because they’re not exciting enough to spark widespread interest.
That doesn’t mean they’re not good stories.
Like allegations of price-fixing in the piping industry.
Doesn’t get more contra-click bait than that. And in a world where eyeballs matter –even in the news media – price fixing in the piping industry ranks somewhere near the bottom.
Now Making Headlines
With the disclosure of the subpoena, the media is finally starting to pay attention. Last week Dan McCrum of the Financial Times picked up on the story. McCrum led the newspaper’s phenomenal reporting on Wirecard, the German fraud.
Otter Tail isn’t Wirecard, but if the allegations are correct, there would appear to be quite a story lurking beneath the surface in an industry that generally flies under the radar of scrutiny… especially the arcane world of selling pipes to municipalities. (Assuming, of course, the DOJ in the seemingly new world order of U.S. politics isn’t gutted or otherwise disurupted!)
In the meantime, my focus has been on Otter Tail itself, which I originally red-flagged as seemingly the most vulnerable of the companies cited by the shortseller. You can read my full report here…
As for Vital Farms, despite reporting better-than-expected earnings and raising guidance, its stock tumbled by more than 15%. If you missed my original Red Flag Alert on the company, you can read it here…
More behind the paywall. Now, on with the show…