Companies 0 See All
Hedge Funds 0 See All
Insiders 0 See All
Institutional Investors 0 See All
Click here to see all results for
Hedge Funds

Billionaire Steve Cohen Bets Big on Ann Taylor – Ann Inc (ANN): The Gap Inc. (GPS), Limited Brands, Inc. (LTD)

Published on March 18, 2013 at 8:58 pm by The Motley Fool in Hedge Funds
<< Prev
Page 2 of 2
See All

Limited Brands, Inc. (NYSE:LTD) is looking for differentiation with the initiative of placing smaller Victoria Secret stores in airports and tourist destinations. This is a one of Limited’s recent ploys to increase its exposure and brand recognition. Meanwhile, all of Limited Brands, Inc. (NYSE:LTD)’s brands appear to be performing well. January comp sales were up 8% for Victoria Secret, 10% for Bath & Body Works and White Barn Candle Co., and 15% for La Senza.

Fifth & Pacific Companies Inc (NYSE:FNP) has seen some struggles from its Juicy Couture brands, where clearance markdowns pressured earnings last quarter. I think the turnaround of this segment will continue to put pressure on the retailer, but the company does have its Kate Spade and Lucky Brand businesses to help prop the company up in the interim. Despite recently lowered 2012 and 2013 EBITDA guidance the stock is up nicely year to date…

The recent run up does make the a bit too too expensive though, not to mention the company’s continued negative earnings.

Valuation

Ann is the one of the cheapest retail stocks when compared to major peers based on a variety of metrics:

Price to Earnings

Ann 15
The Gap 16
Nordstrom 15
Limited Brands 18
Fifth & Pacific n/a

Price to Sales
Ann 0.6
The Gap 1.1
Nordstrom 0.9
Limited Brands 1.3
Fifth & Pacific 1.4
Price to Operating Cash Flow

Ann 8.6
The Gap 10.8
Nordstrom 9.5
Limited Brands 12.6
Fifth & Pacific 600
I’m also impressed by the retailer’s gross profit margin…
Ann 58%
The Gap 43%
Nordstrom 43%
Limited Brands 45%
Fifth & Pacific 56%
Assuming investors take notice of Ann’s growing market share the stock should trade more in line with its peers. If Ann manages to see multiples expansion to the extent that the stock trades at the peer average of 1.2 times sales, the upside could be upwards of 100% based on 2012 sales.
Don’t be fooled
It appears that SAC Capital and Cohen have found an interesting buy in a fragmented apparel retail business (see all of Cohen’s stocks). Ann is one of the cheapest stocks in the industry, but also has a very robust gross profit margin at 58%. Although Ann’s focus on women’s apparel limits its customer base, let’s face it, the majority of clothing shoppers are women. With solid upside potential it’s hard not to like Cohen’s latest investment in Ann.

The article Billionaire Steve Cohen Bets Big on Ann Taylor originally appeared on Fool.com and is written by Marshall Hargrave.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

<< Prev
Page 2 of 2
See All

Show more...Show less

Related Insider Monkey Articles
Maverick Capital’s Largest New Positions: EMC Corporation (EMC), Crown Castle...iPhone Vs Galaxy S4: Samsung Galaxy S4 Images – What do you see? – Apple...
The US’s 10 Most Liberal StatesHedge Fund News: Bill Ackman, John Paulson, Verizon Communications Inc. (VZ...
Facebook Inc (FB) Leads Companies With This Secret Weapon: Apple Inc. (AAPL...Is Vera Bradley, inc. (VRA) a Veritable Value? - Coach, Inc. (COH), Fifth &...