Back in October, after it was revealed that Oprah Winfrey had bought a 10% stake (subsequently boosted to 15%) in fad food diet company Weight Watchers, and after the media diva swallowed the margin accounts of thousands of shorts (75% of WTW’s float was short at the time), we said that a simple way to profit from Oprah Winfrey gaining weight was to go short WTW stock.
Considering that the stock was then trading around $15, and had since dropped back to a far more realistic level of $11, one could imagine that Oprah did in fact gain a little weight.
Of course, the trade could also easily go the other way as well, and as Bloomberg reports, Oprah proudly announced today that she had lost 26 pounds while on the Weight Watcher diet:
“I lost 26 pounds, and I have eaten bread every single day,” Winfrey said in a video posted to Twitter.
As shown in the chart below, WTW shares climbed as high as $12.49 after the video was released, continuing a trend of Weight Watchers’ stock rising when Winfrey’s weight goes down.
As Bloomberg adds, “investors are betting that Winfrey can help turn around the company, which has struggled to compete with fitness apps and other programs in recent years.”
What they are more aggressively betting on is that Oprah continues to lose weight.
Oprah began appearing in ads endorsing Weight Watchers in December. The latest clip, which she posted with the tweet “Eat bread. Lose weight. Whaaatttt?” focused on her love of bread.
“This is the joy for me,” Winfrey said. “I don’t deny myself bread. I have bread everyday.”
Then again, this being Oprah whose tendency to yo-yo following diets has been well documented, one can be certain that the shorts are licking their chops at the opportunity to double down now in hopes that the next time the diva appears in public having promptly regained her weight, that the price of WTW will plunge accordingly.
But while we wait to see who has the last laugh, one thing is clear: of the $12 million in unbooked intraday WTW gains for Oprah’s 15% stake, this amounts to about $460,000 per pound of weight lost:. If only the rest of the mere mortals had a comparable incentive to get fit again, American obesity epidemic would disappear overnight.
via Zero Hedge http://ift.tt/1QqjJTd Tyler Durden