![]() It’s a tale of a failed relationship with a supermodel, a disastrous attempt to tap into the US capital markets, an 800 per cent share bounce, a deftly and hastily raised $US270 million, and a $NZ1 management buyout to stave off liquidation.Īnd it’s a story of how Naked’s publicity shy, Sydney-based chairman and chief executive, Justin Davis-Rice, hopes to parlay the luckiest break of his life into a lucrative new path for his company. Months of investigation and interviews with more than a dozen sources reveal the story of how Naked Brand Group – the minnow barely keeping the lights on as it grappled with falling sales at its Bendon stores and severely restricted cash flows – was rescued by a mob of small investors looking to take down the big end of town. What follows is a rescue story for the ages. Naked Brand’s CEO Justin Davis-Rice grew up on Sydney’s quiet north shore and went to exclusive private boys’ school Knox Grammar. “Turns out that something else was NAKD.” “Every single investing sub-Reddit was talking about the next GameStop and how we could all pile into something else,” says William, a San Francisco-based Reddit-trader who goes by the handle Efficient_Transact_387. “Based on the information I found, I was like, bring it on,” Anna says.Īnna bought her first $US25,000 ($33,400) worth of Naked stock in the second week of January and within a week had tripled her investment. Having researched the 74-year-old company and identified its ties to supermodel Heidi Klum and, previously, Elle “The Body” Macpherson, along with its ownership of the Fredericks of Hollywood online retailer, Anna decided that despite its cratering share price since relisting in 2018, Naked was a buy. Traders like Anna, however, had other ideas. Failure, they thought, was just a matter of time. Short sellers had been so busy hoovering up the stock that it had become one of the five most-shorted companies in America, as a percentage of its shares on issue. Naked Brand was weeks away from being delisted by the Nasdaq. But by last Christmas it was in big trouble. BendonĪnna didn’t know it at the time, but while the company being touted as a hedge fund-killing trade was listed on New York’s tech-heavy Nasdaq exchange, its main business was actually a household brand familiar to almost every woman in Australia and New Zealand.īendon, the maker and purveyor of lingerie and swimwear, had hoped to take brands including Loveable, Pleasure State, Davenport and Heidi Klum Intimates to the US. “There was lots of chatter about it being the next GameStop.”īendon was forced to pay Heidi Klum a break fee of $US3.5 million after it exited a licensing deal with the supermodel. “Everyone was talking about it,” Anna tells AFR Weekend over a Zoom call. Redditors were posting excitedly about the possibility of sending Naked Brand (NAKD) shares “to the moon” and “making the hedge funds cry”. All they needed to do was pile into some of the worst companies on the market in sufficient numbers that the short-selling hedge funds would be caught out.Īmerican video game retailer GameStop and theatre chain AMC Entertainment were the early movers, and within days traders on Reddit forums such as r/wallstreetbets were reporting tidy profits as share prices began to climb.Īnna was looking for the next big thing when she noticed one little-known stock being mentioned more often. In the days after Christmas her screen, and those of countless others around the globe, had started to hum with activity.Ī movement of retail traders was coalescing around the idea that money could be made from taking down Wall Street hedge funds. ![]() Temperatures were near freezing in January and the strict COVID-19 lockdowns in Anna’s European hometown meant the 30-something retail investor was spending hours glued to her screens.Īnna works in education by day but often spends extra hours searching for penny stocks worth betting on.
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