Donald Morgan’s Brigade Capital Management revealed a 14.7% ownership stake in Bon-Ton Stores Inc. (NASDAQ:BONT) consisting of 2.78 million shares, in a recent 13G filing with the SEC. The stake just the latest increase to the fund’s position in the company, having been increased by 1.78 million shares from the 1.00 million shares that were disclosed in another 13G filing on May 22 and by nearly 2.13 million shares since the fund’s most recently filed 13F for the reporting period of March 31.
Brigade Capital Management is New York-based hedge fund specializing in credit investment strategies, co-founded by Donald Ellis Morgan in 2006. The asset management firm primarily employs a multi-strategy, multi-asset class investment approach with a focus on companies with leveraged balance sheets. Brigade Capital’s investment strategies include: long/short credit, opportunistic credit, distressed debt, traditional high yield, long/short equity, and structured credit, to name just a few. Don Morgan had acted as a Senior Managing Director and Co-Head of Fixed Income at MacKay Shields LLC, managing its High Yield Division for six years prior to launching Brigade. He managed to grow the firm’s high yield assets from $7 billion to $16 billion and raise a $750 million long/short fund. Moreover, Don Morgan was a High Yield Analyst at Fidelity Management and Research Company even before joining MacKay Shields; thus, his expertise in high yield and distressed debt investing is unquestionable. Brigade Capital Management’s public equity portfolio is worth $1.52 billion as of March 31, 2015.
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Bon-Ton Stores Inc. (NASDAQ:BONT) is one of the largest regional department store operators in the United States, providing a large portfolio of brand-name fashion apparel and accessories. Bon-Ton’s portfolio of merchandise offerings also comprises cosmetics, home furnishings, and other goods. The company operates 270 stores, including nine furniture galleries and four clearance centers, under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s, and Younkers nameplates. The shares of Bon-Ton have decreased by 21% since the beginning of the current year, however the stock has been riding a strong uptrend more recently, achieving a gain of over 32% so far in July.
The company competes in the department store segment of the U.S. retail industry, which is considered a very competitive one. And considering the fact that U.S. retail sales unexpectedly dropped in June as households cut back on spending, it seems that Bon-Ton Stores’ outlook is not very positive. However, the company has been accompanied by positive news lately. At the end of the previous month, Bon-Ton Stores sold a portfolio of six retail properties to one of W. P. Carey Inc.’s non-traded real estate investment trusts for $84 million. The properties will be leased back to Bon-Ton, while the proceeds from the transaction will be used to pay off one of the two of Bon-Ton’s mortgage loan facilities, due in April 2016. The President and Chief Executive Officer of Bon-Ton, Kathryn Bufano, has also claimed that the company is seeking refinancing options for the second of the two mortgage facilities. Thus, Morgan could be quite a handy consultant for the company, considering his expertise and network in the sector. Nevertheless, the aforementioned deal is set to enhance the company’s financial flexibility, which will definitely increase the future prospects of Bon-Ton.
We’ll now take a glance at the financial performance of Bon-Ton Stores Inc. (NASDAQ:BONT) for the first fiscal quarter of 2015. The company posted net sales of $610.9 million in the period compared to $607.5 million reported in the same quarter a year ago, which yields an increase of 0.6% year-over-year. Additionally, Bon-Ton reported a net loss of $34.1 million or $1.74 per diluted share, compared to earnings of $31.5 million or $1.63 per diluted share in the first quarter of 2014. However, it is worth taking into account that the company’s business is subject to seasonal fluctuations, with the major portion of sales and income generated during the second half of each fiscal year. Therefore, the results for this quarter may not necessarily indicate or suggest the results that might be achieved for the full fiscal year. Bon-Ton also reaffirmed its fiscal guidance for earnings per diluted share, in a rather wide range of a loss of $0.25 to earnings of $0.25, based on the first quarter financial performance. In the meantime, David Warren’s DW Partners and Mario Gabelli’s GAMCO Investors represent the largest shareholders in Bon-Ton Stores Inc. (NASDAQ:BONT) within our database as of March 31, holding 1.69 million shares and 698,397 shares, respectively. Brigade now ranks as the largest shareholder that we track based on the available data.
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