A June addition to the Satellite portfolio resides in a part of the equity markets that investors are very fearful of these days. The retail sector. Typically, I navigate away from retail in my investment process because consumer trends can change very rapidly. In addition, I usually avoid turnarounds with high debt loads. However, value cannot be ignored, and I purchased shares in Tailored Brands (“TLRD”) in early June. The idea came courtesy of Michael Burry, who’s firm, Scion Capital Management, disclosed a stake back in March.
TLRD is a beaten down, small cap retailer in a niche corner of the retail clothing market. The company is the largest men’s formal wear provider in the U.S. and Canada. The business has struggled lately but I believe that the current valuation has priced in an unwarranted amount of negativity that has produced an asymmetrical risk/reward opportunity that, with a little patience, investors can exploit.
The full analysis can be found here:
I have sized the position relative to the higher risk of this investment. My position in TLRD is ~3% of my active portfolio. This will be reflected in in the Author’s section with the next portfolio update. Questions/Comments? What do you think about the investment?