Filed under: Bargain stocks

Hot Topic Inc (NASDAQ: HOTT), the trendy retailer with a downward trending stock price, announced last night that it is buying back $40 million of stock, roughly 11% of the company’s value.

As we blogged in early July, the retailer is way off from its $30 high and is now selling for $8.15. The sagging stock price has attracted SAC Capital, which accumulated 5.1% of Hot Topic stock, or 2.3 million shares.

We blogged about the merits of bottom fishing in this retailer, but proved a bit early as investors dumped retail stocks on weak economic data and concerns about the subprime market hit the headlines. Hot Topic also got hit due to Take-Two Interactive Software Inc (NASDAQ: TTWO) delaying the launch of Grand Theft Auto 4, as the introduction of new game consoles is thought to have boosted Hot Topic’s results in the past.

Hot Topic has a clean balance sheet and a second concept, Torrid, which provides plus-size fashion-forward apparel and accessories that target young women principally between the ages of 15 and 29, that is doing alright.

Last night’s announcement can be credited to SAC Capital. SAC likes the management of overcapitalized balance sheet to put any excess money to work quickly. The combination of a large share repurchase in addition to a potential turn around of the Hot Topic concept could drive this stock considerably higher in 2008.

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This entry was posted on Tuesday, August 14th, 2007 at 1:32 pm and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.