Big Gains on a Brand Turnaround: 11/13 Top Performer
Downward momentum from last week’s session looks to have carried forward into this week’s trading. Major indexes were down sharply to start Monday. They have been clawing their way back toward neutral as the day progresses, but markets remain broadly down at the time of this writing. Positive deal-making in the consumer goods sector was not enough to overcome stalled industrials, as investors continue to await the outcome of US tax reform legislation.
Our Top Performer today pierced the sagging momentum to fight its way to explosive same-day gains.
Cherokee Global Brands owns a series of global lifestyle and clothing brands, including prominent names like Tony Hawk Signature and Saint Tropez. They license these brands to retailers in over 100 countries.
Their stock shot up on Monday after they announced the receipt of a new Senior Credit Line from Cerberus. CHKE has been dealing with a liquidity crunch in recent months. This new agreement will ensure their continued access to operating capital while giving creditors legal options for buying shares of Cherokee’s stock.
The $2.70 stock has been in long-term decline since 2007, when it reached heights over $45. CHKE has since been flipped between numerous brand conglomerates. It hit a new low in January 2017 when it announced it has lost its licensing deal with the major US retailer Target.
They are continuing to execute a strategic pivot, purchasing a mall retailer chain and exploring a more direct retail model for many of their products.
Investors appear inspired by the new credit line’s ability to facilitate the turnaround plan, buying the stock to the tune of 42% gains in just a few hours. The senior line is powerful evidence the knowledgeable insider players see recoverable value in the CHKE brand lineup.
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