While my imaginable Indigo short trade is doing ok, I have decided to short Cascades Inc. (TSX:CAS) for real.
All values are in CAD unless noted otherwise.
Reasons to be short:
- More than $2B in debt with and, I would say, around 6% (and growing) interest rate:
Source: Cascades Q1’2023Total debt grew $100m during last quarter with more interest rates hikes on the way.
- Insiders were seling a little bit recently around $12/share price. I’ve mentioned about this in my WeBankrupt™ post.
- I mean, both Fed and BoC want a slowdown in ecenomy, lower inflation rate and higher unemployment, which means lower revenue for most of the companies out there. It’s just dumb to be bullish in this situation. But, of course, companies with bigger debt budren will suffer the most.
It’s probably not the best stock to short, but I wanted to short at least something. 😀
My short price is $11.93.
Another point I forgot to add.
Why buy CAS shares with a ~4% dividend yield if you can get GIC with a 5.5% interest rate?
I’ve chickened out and covered my short today at $11.88.
Initially, I was planning to hold until the Q2 report, which will be out after tomorrow, but the price didn’t really tank as I hoped.
I have no projections for Cascades‘ Q2 results.
I think there will be nothing positive, but I’ve just decided to be on the safe side.