Crocs Trade Crocked – A Week Late, Several Dollars Short


Crocs announces Blackstone deal and CROX rallies about a week after our options expire, and we take it personally.

It has been a while since I’ve given an update on the Fund, the little fund that could. Since inception in February, it is up over 40%, with the original capital up over 89%, as of this writing.

It has not been all fun and games, and there have been some ups and downs.

Crocs Logo
Crocs, stylish and profitable, if you’re Blackstone.  I’ve always heard the Blackstone guys dress sharp.

Today’s discussion is a downer. Let’s look at some chronology:

July 26, CROX is looking beaten up, and analysis shows room to move, particularly if they attract some institutional interest. We buy some December 21 $14 calls. It closed at $13.73, while recently trading over $16 and $17 per share. Should be a good one, right?

Early August, CROX traded over $14 for a few days. Time to put the down payment on the yacht, right? It began to slip, trading in the $12-13 range for the next few months. Uh oh.

November 27, there was news that Crocs was talking to buyout firms, including Blackstone, and the stock jumped to $13.84. The beginning of a rally? Nope. It slipped again.

December 21, our options expired worthless as the market for them faded away and we hoped for a white knight.

A mere nine days later, Crocs announces a huge deal with Blackstone, and the stock jumps over 20% to close at $16.14. Seriously, you guys couldn’t have done this 10 days ago?

The lesson:  Being right doesn’t mean you’re timely.  If we had purchased the calls with a later expiration date, it may have worked out, but they were more expensive.  In either case, we had the right idea with the wrong timing and corporate financing transactions take time to work out, even if it seems like they should occur.


Missed it by that much (*holds index finger near thumb*).



This entry was posted in Anatomy of a Trade, Trading Strategy and tagged , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *


You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>