Speaking at a Ritholtz conference and highlighted in a recent Barron’s article, the Paul Revere of the “666 generational low” Doug Kass commented that he is short a few asset managers. One such short is Franklin Resources with ticker symbol BEN and if you look at it’s performance over the last quarter, Doug may be on to something. In fact, just this past week the stock was up over 11.5%! For the quarter though, the stock is up a whopping 94% and just over 19% for the month.
A few other items of interest in BEN is the lack of shares short with a scant 3% of the float short after a quarter like that is suspicious. There’s also the fact that nearly 35% of the stock is owned by insiders and another 50% is owned by institutions. As of close Friday, BEN has made a staggering 102% climb off of it’s 52-week low of $36.97 and is about 31% off of it’s 52-week high of nearly $108. One can’t not notice that the 52-week range is rather wide and that makes for some decent potential.
Why short? If the current run up doesn’t wet your palate then perhaps, as Mr. Kass points out, the fact that over 1/5th of the S&P 500 companies stated that Q1 would go on without the matching of employee’s contributions to their 401(k). That matching was a guaranteed win for the employee but, more importantly, the lack thereof is a blow to asset managers such as BEN. One other tell that may be of interest is that since June 1st, Citigroup upgraded BEN to a “hold” and gave it a price target of $75 (where it closed on Friday). In addition, “Donny” Deutsche Securites and Stifel Nicolaus have either initiated or reiterated their bullishness in BEN. With the stock at or near the analyst’s expected price, one can’t help but wonder if they aren’t unloading it or, better yet, buying into this rally as window dressing.
I’m a technician and don’t delve into the fundies much so my arguments would be weak at best in that arena. However, from a technical perspective there does appear to be some indication that the stock is due for a pullback, but it’s not screaming. I’d be more inclined to sell premium in the form of options, like the June $75 calls or more conservatively the $80 calls. As of close Friday you could sell the June 75/80 call vertical for about $1.60 which would leave you with a maximum risk of $3.40 and a coin toss with respect to the Delta.