# Performance Sports Group, to & nyc



## humble_pie (Jun 7, 2009)

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interesting small cap that has fallen on hard times.

manufacturers of best hockey sticks in the world, hockey helmets, guards & shields; baseball bats & gear; lacrosse equipment. Premium brands such as Bauer & Easton are household words. What PSG says is that parents are eager to pay top dollar for quality sports equipment for their growing kids.

so why the bad news? 2 things - most of their product parts are manufactured in the US but finished goods are still sold heavily in canada, so this pairing (the reverse of most successful canadian export stories) has pinched them in an FX trap for a few years. If USD levels out or drops, currency exchange could help to improve the picture for PSG.

also their principal US customer, retail sports chain The Sports Authority, declared bankruptcy a few weeks ago. Oops.

as if these 2 big negatives were not enough, company has undergone management upheaval. The CEO departed this week amid swirls of lawsuits, which imho are nothing more than the usual lawsuits filed by opportunistic US law firms. There are no hanky-panky issues, rather the charges are that PSG did not properly infirm its shareholders of its deteriorating earnings picture.

acting CEO Amir Rosenthal has been the company's CFO for many years now. 

on the good side of things, Performance Sports Group has some blue-blooded backers who swooped in & bought 640,000 more shares the day after Sports Authority tanked.

the Desmarais family trusts (power corp etc) have always been big shareholders. The Desmarais-founded US hedge fund Sagard Capital has just installed its own CEO on PSG's board of directors. It looks like the Desmarais squadron pushed the old CEO out & are planning to re-engineer this once-proud manufacturer of canadian sports gear.

does performance sports have a future? or will debt crush them in the end? it's far too soon to know, i bought a few shares in the risky portion of portf because i like rise-again-phoenix stories such as this one.


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## james4beach (Nov 15, 2012)

I was long PSG for a period but sold it back at $14.59 on weakening technicals. I had no idea it fell so hard.

Technical analysis saves the day again?


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## humble_pie (Jun 7, 2009)

so buy it back now? price has dropped to USD $3 level.

if one is looking for fallen angels, PSG might be a better cherub than messing around with bombardier. For one thing, PSG has real products to sell, whereas bombardier maybe does, maybe does not, depending on which rumour is topside today.


EDIT: i forgot to add that, with the demise of retail chain operation Sports Authority, PSG is said to be looking into opening its own stores. Picked this up from a presentation they gave in california 10 days ago.


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## james4beach (Nov 15, 2012)

Thanks for bringing attention to this. I'd have to crack open their books again. The last time I looked (just going by memory) their income was plummeting and it looked like a very bearish picture. But this was before the stock plummeted.

P.S. it was a rather attractive looking annual report with nice sports things on the cover. Call me old fashioned but I love the paper reports.


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## humble_pie (Jun 7, 2009)

^^

often in these just-breaking stories one is going on intuition ... my intuition says that performance sports is still a proud old-fashioned company.

dan friedberg, the Sagard CEO who was named to PSG's board of directors a couple days ago, is from montreal. Do you suppose he grew up rooting for the Habs ...


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## hollyhunter (Mar 10, 2016)

PERFORMANCE SPORTS GROUP LTD (PSG.TO): RSI indicator crosses above the oversold line (30) with positive bias.


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## Quotealex (Aug 1, 2010)

The stocks has plunged by 43% today


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## Spudd (Oct 11, 2011)

http://ca.reuters.com/article/businessNews/idCAKCN10Q1HP


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## MrMatt (Dec 21, 2011)

I think the lenders will look at the financials. It's really a question of how much did they lose due to unpaid recievables (one time event) vs a broken business model.

They won't shut them down if it will be more profitable to keep them alive. The worst for shareholders is if they demand additional compensation to not pull the plug.


Anyone done a detailed analysis yet? This one has piqued my interest.


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## james4beach (Nov 15, 2012)

james4beach said:


> I was long PSG for a period but sold it back at $14.59 on weakening technicals. I had no idea it fell so hard.
> 
> Technical analysis saves the day again?


Guys, there really is something to technical analysis, and it's a toolset worth learning. PSG has fallen 83% since my technical screening told me I have to sell it. You can see in that thread I linked that in October 2015, I wrote: "VRX, IFP, PSG, PLI, GC -- they're still in my current portfolio and I'm still long, *but it's unlikely that any of these will qualify for the next period. They no longer satisfy my T/A criteria for good looking stocks with uptrends in place.*"

I'm by no means a T/A fanatic but I think it's useful in two ways: (1) it helps you hear what the market is saying, and (2) it helps shift the odds slightly in your favour. These are not purely predictive; think of it as enhancing your % odds of a successful trade.

At the time I sold it, the technicals were telling me that the market was losing its zeal for PSG. This had been a stock that used to gain steadily, month after month. I sold when the momentum had run out, and it started to exhibit losses instead of continuing its uptrend. I really had no idea that it would fall THIS hard... this is a big surprise.

If you want to start learning about T/A, I'd suggest becoming very familiar with: moving averages, interpreting volume, and patterns like higher highs, death cross.


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## james4beach (Nov 15, 2012)

As an exercise, I went back to my post from the linked thread and looked at the portfolio that held PSG and others. I mentioned at the time that T/A said that several of these stocks looked bad and would no longer qualify for being held. So let's try separating the total portfolio into the ones failing T/A, and the remaining ones.

The ones that I said now look bad on T/A terms had performance from the analysis date to today:
+53% PLI
+24%
+19%
-76% VRX ... disaster
-84% PSG ... disaster

This "bad T/A" group had an average -13% return, but obviously a high variance.

The remaining stocks that were not eliminated by T/A had performances to date:
+15%
-13%
-17%

This "not bad T/A" group had an average of -5% return, tighter spread, and no disastrous returns among them like with VRX & PSG.

I think it shows how the T/A shifts the odds slightly in your favour. I'd rather end up with the second group, and in my experience T/A does help with that. Not dramatically, but it helps.


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## humble_pie (Jun 7, 2009)

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facts & rumours abound.

a US pension fund has filed suit against PSG in NY state, claiming the manufacturer of high quality Bauer & Easton hockey sticks & baseball bats pressured store & league buyers to accept merchandise early & to increase their purchases every year.

the SEC & canadian regulators are probing these allegations of channel-stuffing & possibly other allegations.

performance sports says it's conducting internal audits, can't meet its financial reporting deadline, is meeting with bank creditors to discuss debt.

it's not an out-of-control titanic sinking yet, more like a couple of sticky wickets that appear to coordinate. I'm wondering if the fine hand of graeme roustan is visible in the wickets.

roustan is an embittered former owner & CEO of PSG who now owns a sports equipment retail sales network. For at least a year, performance sports group has been planning its own retail sales network featuring not only its famous Bauer, Easton & other brand name products but also new lines of sports apparel & accessories. 

roustan is said to be grimly determined to prevent PSG from creating a franchised retail sales operation that would compete with his own stores, which presumably don't sell Bauer sticks or Easton bats. Roustan's goal is said to be nothing less than the elimination of the once-proud canadian sports manufacturer.

backing PSG are the Power corporation Desmarais family interests, which own 17% of performance sports. Although previously keeping a distance, on july 25th the Family turned activist when scion Paul Desmarais III joined the PSG board.

although i "imagine" that performance sports will be able to pacify the creditors - perhaps witih a little help from Desmarais - i would certainly refrain from acquiring cheap shares or options at this time.


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## MrMatt (Dec 21, 2011)

humble_pie said:


> .
> 
> backing PSG are the Power corporation Desmarais family interests, which own 17% of performance sports. Although previously keeping a distance, on july 25th the Family turned activist when scion Paul Desmarais III joined the PSG board.


I have some POW, I'll let them fight it out.


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## humble_pie (Jun 7, 2009)

MrMatt said:


> I have some POW, I'll let them fight it out.




it's the private desmarais family interests that hold PSG. I don't believe power corporation or any of its subsidiaries have any connection to performance sports.

imho the big risk now is concern that worse news may yet emerge from the woodwork.


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## nobleea (Oct 11, 2013)

Shoulda woulda coulda. Stock is up over $2 over the past week.


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## humble_pie (Jun 7, 2009)

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driving PSG's 10% share price gain over the past few weeks have been 3 new institutional acquisitions of the troubled sports equipment manufacturer. Together the 3 shareholders have recently purchased 25% of the company.

toronto's Brookfield Capital Partners acquired just under 11% in late august. Because brookfield capital is a private company, it is not discussing the acquisition.

US hedge fund Coliseum Capital acquired just under 10%, also in late august.

UK retailer Sports Direct International acquired 4.1% between june & august this summer.

analysts are suggesting that a breakup of venerable Performance Sports Group may be in the works, as the best solution to its crippling US $450 million debt. Roth Capital analysts say that PSG's brands - with the most valuable being Bauer hockey gear - are worth $1 bllion while the value of the enterprise as a going concern is less than half at $470 million.

PSG's banks have given the firm until the end of october to come up with a debt repayment plan; however such dates can be & frequently are re-negotiated forward several times.


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## hollyhunter (Mar 10, 2016)

Technically speaking, the short term looks good. Would like to see a break at 5.35 with a short term target of 6.25.


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## humble_pie (Jun 7, 2009)

^^


holly there's some automaton on the montreal exchange that follows new orders, automatically doubling an order to buy an option or to sell an option in less time than it takes to blink a human eye.

one can send an order to sell 12 calls at 1.20 & instantly one's order will appear in the detailed quotes sizing figures, except the number of contracts on offer at the ask price of 1.20 will now be 24, not 12. The phantom doesn't seem to harm the execution of the order, but the speed with which he shoots out of the shadows & attaches himself to a real order is unnerving.

US option exchanges don't seem to have digital ghosts like this, so it's a question of madcap montreal exchange only. 

wondering if you might be a cousin of his ... 

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## humble_pie (Jun 7, 2009)

brookfield said to be in the game, PSG up 16% on the day.

bloomberg news says that former PSG chairman Graeme Roustan was behind the recent rout, which is what i mentioned upthread.

roustan is said to be seeking financing to buy pieces of performance sports group. Evidently his hope is to crush the company so it won't build its planned north American retail sales network. Roustan already owns such a sports equipment outlet, he's hoping to prevent competition.

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## MoneyB (Oct 22, 2016)

Could squeeze this up to 6 for a quick profit, but it will likely see some pushback when it hits


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## nobleea (Oct 11, 2013)

It's now in bankruptcy proceeding in CAN and US. Who knows if existing shareholders will get anything. Probably not.
Interesting ride. I've never owned any.


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