When Bears Attack: Kate Spade Selling Off After Low-Ball Offer From Coach

Kate Spade & Co KATE shares are trading sharply lower by $3.40 at $19.39 in Tuesday's session. Investors are bailing out of the issue after it was reported the company would spend more time to negotiate the Coach Inc COH offer.

In other words, the impending offer is nowhere near Monday's closing price ($22.80) where the accessories and apparel maker is looking for in a deal.

Longs trapped in the issue from much higher prices began selling in after-hours and premarket trading and have not let up. After a much lower open, it managed only a nickel bounce to $19.90 before continuing its move lower. So far, the follow-through decline has taken the issue to $19.17 and it is not far off that low.

Keep in mind, the issue closed $14.51 on December 27, when the initial rumors of a potential sale surfaced the following day. So far, the "Johnny come lately" buyers pushed the issue to a high of $24.18 on February 28. At this time, the 65 percent price appreciation at that level, may far exceed the amount Coach Inc. is willing to pay for the company.