Tempur Pedic International Inc. (NYSE: TPX) was absolutely slaughtered this week due to its warnings.  The news took out about half of its value, but the stock is now down about 75% from its highs.  The company is declaring that the market reaction has just been far too severe.  Today’s news is that the company is aggressively repurchasing shares with $200 million remaining available under its buyback plan.

If today’s news takes hold and can matter, we would be watching other bedding plays that have also suffered,  Sealy Corporation (NYSE: ZZ) is rather small with a $171 million market value and only a $1.70 stock. Mattress Firm Holding Corp. (NASDAQ: MFRM) had been on fire with raised guidance and it was one of the better IPOs, but its shares fell in sympathy from over $35 to right at about $29.00 now.  Select Comfort Corporation (NASDAQ: SCSS) also saw its shares fall from over $26 to under $22 now on the news this week.

The SEC filing noted, “As more fully described in the press release the Company had $200 million remaining available under its share repurchase authorization as of June 6, 2012. The Company also acknowledged that certain executives and directors have notified the Company of their intent to exercise and hold a portion of their vested stock options. In addition, the Company has also been notified by certain executives of their intent to purchase Company shares in the open market.”

We have yet to see any Form 4 filing showing actual executive purchases from insiders as of yet.  Once we see those then we will know just how many shares insiders are really buying.

Tempur Pedic shares are trading up only 0.75% at $22.56 so far this morning.  Historically drops of this magnitude rarely turn back around on a dime, whether companies buy shares or not.  Look at J.P. Morgan where the stock got crushed, and Jamie Dimon said he was halting the stock buyback plan for the time being.

Maybe Tempur Pedic’s biggest problem is that the beds are hard to have sex on.  Seriously, that could be an issue as the Barron’s cover article pointed out.

JON C. OGG