More ‘Hope & Rumors’ Drive SUPERVALU

SUPERVALU Inc. (NYSE: SVU) is a down and out turnaround.  It has proven to be a turnaround which some think cannot be turned around.  Others have listed it as a value stock, and some even hope for industry consolidation to help the company get gobbled up by a larger rival or by a private equity firm.

We noticed a price and volume spike late in the trading day on Monday but the problem is that the volume was light until the final minutes of the day.  After CNBC pointed out the sudden increase in the overall share price this retailer was simply up on low volume.

It is important to realize that some 24.6 million shares traded hands on Friday and the price went from $4.61 the day before to close out the week at $4.88.  Today’s move appears to be a late-day continuation rather than something brand new. That being said, anything is possible and the rumor mill rarely goes away quietly.

With about 15 minutes until the close the shares are up 3.3% at $5.04 on almost 5 million shares.  An average daily volume is supposed to be about 8 million shares and the market cap is still only $1.07 billion.  With a 52-week range of $4.05 to $9.71 it is hard to understand which firms may be interested.  It is also hard to understand if this is a real rumor now the way it was reported by CNBC or if this is just “an old typical rumor stock getting a price spike” after a prior day’s volume spike.

It feels more like a lack of sellers during an institution buying up shares or buying new shares under a VWAP trade (volume-weighted average price) after a huge share volume spike the prior trading day.

JON C. OGG