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Please slap me: Deb Shops (DEBS) disappears… and my $100 disappear too… October 26, 2007

Posted by deminvest in debs, investment, My investing mistakes, Single stocks, stocks.
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My decision to buy Deb Shops was a perfect example of what NOT to do!

Please: click here to slap me for buying stupid DEBS (but maybe the stupid isn’t DEBS…)

I bought Deb Shops in may 2006 because I read somewhere that they were giving out a one-time 20% extraordinary dividend. I checked out today, but never got that dividend… Then I found out the 20% dividend has been given in 2005. So I bought a stock to get a dividend that had been given one year earlier: what a lousy research job!

This should tell my one or two readers to double-check ten times any info contained in my Blog before making any trading decision!

What I wrote above should be enough to Put DEBS within my (large) Investing mistakes category, but bad things can go worse when the big guys want to make big money on our mistakes:

I bought my 30 DEBS shares at $30.6 each… Some smart guys, more than a year later, decided to sell them to a private equity group for $27.25 each. Which is even lower than the average price in the month before the deal!

This article from Forbes says it all. I extracted few quotes, in which Proxy advisory firm Proxy Governance In say about the deal:

  1. the offer was made at “a discount of 4 percent to the average closing prices for the preceding one-month period,”
  2. “very concerned” with the level of oversight and direction provided by the board during the six-month sale process that preceded the agreement
  3. “In light of the potentially conflicting interests of senior management, we believe that the board should have provided far closer oversight of the process, preferably through an independent committee of the board,”
  4. The firm recommended shareholders vote against the offer.

Well I would have voted no. I have no clue about who voted yes, but now DEBS is the delisted. I got less cash than I put in more than a year ago… and I couldn’t even take myself the decision to sell!

Comments»

1. Kevin - October 26, 2007

OUCH! I’m not sure if I should slap you, I bet the pain from finding out your research was flawed hurt enough. I always try to make my investing decisions on things I know and in great companies. I try not to let one piece of information that looks good override all the crappy information I found. It is hard though to not make that jump.

I put a list of investing mistakes I and others have made next to me before I ever buy or sell anything.

2. deminvest - October 26, 2007

Good idea Kevin, I should do it too: I should visit my investing mistakes blog page https://deminvest.wordpress.com/category/my-investing-mistakes/ before making any trade.

3. Idetrorce - December 15, 2007

very interesting, but I don’t agree with you
Idetrorce


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