A multitude of factors have contributed to this retail decay, including fierce competition from other retailers like H&M and Forever 21. According to Business Insider, teens are spending less money, and when they do spend money they are more likely to spend it on technology and fast food.
On top of all that, the times are a-changin’. Nobody wants to buy a shirt with an obnoxious logo on it anymore. Part of Abercrombie and Fitch’s business model was that people would pay more for the brand. As clothes become more nondescript, these big three have been feeling the squeeze.
American Eagle ($AEO) reached its peak, around $34 per share, in 2007 and hasn’t gotten close since.
Aeropostale ($ARO) stock reached its peak in 2010. It got to over $31 per share, but has lost over 90% of its value since then. At the time of this writing, it is trading at $1.85.
Abercrombie and Fitch ($ANF) stock peaked in 2007 at $84 per share, lost 80%, then came back up near previous highs again in 2011. Since then, four years considered, it has been in a downtrend.
However, Abercrombie and Fitch stock is one of my buys right now.
One of my biggest investing rules, inspired by Stan Weinstein, is never ever invest (go long) in a stock in a downtrend. Don’t get me wrong, this is good advice, but there are exceptions to every rule.
I won’t buy a stock that’s in a downtrend unless it has a certain quality. It MUST have this one thing or else I won’t ever consider it.
What is it?? Insider buying.
You see, $ANF has had a large amount of insider buying this month. My screening service allows me to see insider buying taking place. On June 5th, Fran Horowitz, President of the Hollister brand, purchased 10,000 shares of $ANF. Before this point, she owned NO shares. Interesting…
Then on June 9th, Christos Angelides, President of Abercrombie and Fitch, bought a whopping 45,200 shares. Before this, he didn’t own any $ANF shares either!
If two company presidents are gobbling up shares, it sends all types of buying signals. Both joined the company in 2014, so perhaps their heavy buying is a vote of confidence in their own ability to enhance the bottom line.
Only time will tell. Until then, I’m invested in $ANF. I bought June 9th at $22.20 and plan to hold for a few months.