Torstar Corp. (TSB) – Textbook Example of ‘Coming Out of the Blue’


With over 2,000 companies in our Facebook Application database there can be many daily examples of our Model Price Theory (MPT) at work.  However when I observed what transpired over the last few quarters with Torstar Corp. (a Canadian media property with a majority of its assets and revenues in the newspaper business) I had to write a blog detailing the trading action of its publicly traded stock.

Here is our model price chart of Torstar as of May 1st, 2014.  As some of you know on the morning of May 2nd, Torstar announced that the company sold its Harlequin division – book publishing division – for a reported $455 million.

 

Torstar Corp. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Torstar Corp. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

 

Observables from our chart

 

1.         Since August of 2013, Torstar’s publicly traded common stock tried and failed several times to trade – in a sustainable way – above our last EBV line or EBV-3 until March of 2014.  I have annotated several attempts in the latter part of 2013 and early 2014 where the company’s stock attempts a transit.

 

2.         Finally, in March of 2014 – also annotated – Torstar convincingly demonstrates a positive transit of EBV-3.  Based on our Model Price Theory (MPT) this positive transit represents investors’ confidence, transmitted through TSB’s share price, in the company’s recorded assets on the company’s publicly available and audited balance sheet.  Also note the ‘up’ volatility in the length of our recorded weekly price bars on the positive transit.

 

3.         Once the positive transit of EBV-3 did occur, at the end of March, notice the trading action in the following 5 weeks.  You can observe not only the weekly trading volatility diminish substantially but also Torstar’s stock consistently trading above EBV-3.  Yes, almost waiting for something to happen.

 

And something did!

 

On May 2nd the corporate transaction (above) was publicly announced.  Below is our model price chart after the close on May 5.

 

Torstar Corp. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Torstar Corp. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

 

Amazing you say!

 

We – the users – see this all the time on our Model Price app.

 

One response to “Torstar Corp. (TSB) – Textbook Example of ‘Coming Out of the Blue’

  1. Bob Smith May 29, 2014 at 2:54 pm

    The move up in March and April was due to better than expected results; the sale of Harlequin announce in May was unexpected. The fact that it was also positive news and further boosted the stock was a coincidence.

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