Steven Cohen‘s new fund, Point72 Asset Management, has initiated a stake in Stage Stores Inc (NYSE:SSI). Point72 reported in a new filing with the Securities and Exchange Commission ownership of approximately 1.61 million shares of the company. The position amasses 5.1% of Stage Stores’ common stock and is passive by nature.
Amid Mr. Cohen’s acquisition of Stage Stores Inc (NYSE:SSI)’s shares, the stock of the company spiked and closed around 2% higher on Friday. However, the stock still trades 22% lower in comparison with the beginning of the year. Moreover, a couple of days earlier, on September 23, the president and CEO of the company, Michael Glazer acquired 10,000 shares of the company in an open-market transaction paying $16.23 per share.
We should also mention that Steven Cohen was holding shares of Stage Stores Inc (NYSE:SSI) through his former hedge fund, SAC Capital Advisors. In the 13F filing for the fourth quarter of 2013, SAC Capital disclosed holding approximately 658,500 shares, down by 70% on the quarter. In the last round of 13F filings, several other investors, among those that we track, reported holdings in Stage Stores. The largest of them is Chuck Royce‘s Royce & Associates, which following a 59% decrease in its position, owns 308,500 shares of the company as of the end of June.
Stage Stores Inc (NYSE:SSI) has a good chance to become a profitable investment for Mr. Cohen. Despite the company’s stock decline, Stage Stores stands strongly from a financial point. Even though the revenue of the company declined to $377 million in the second quarter from $395 million a year ago, its EBITDA went up to $35 million, from $32 million, and EPS grew to $0.35 from $0.29 in the second quarter of 2013 and from -$0.60 in the first quarter of 2014.
In this way, the stock price of Stage Stores declined amid an overall decline of the Apparel retail industry, which lost around 7% year-to-date, with most companies from the industry taking a hit. Stage Stores Inc (NYSE:SSI) is based in Houston, Texas and it operates several department and off-price stores under the Beals, Goody’s, Palais Royal, Peebles and Stage names.
All in all, following Mr. Cohen’s stock picks can turn to be a profitable strategy. Mr. Cohen has a fame on the Street for the impressive returns delivered by SAC Capital Advisors. SAC returned around 30% over the last 20 years of its existance, which allowed Mr. Cohen to receive higher fees than other managers on Wall Street and also made him one of the best-paid managers. However, SAC Capital lost the confidence of investors amid several cases of insider trading, which led to the fund paying huge fines and eventually shutting down, in addition to two of its portfolio managers being sentenced. However, Mr. Cohen’s new fund, Point72 Asset Management, which manages Mr. Cohen’s own money, still succeeded in the first half of the year, outperforming other hedge funds by a big margin (9% versus 2.5% average hedge fund return).
Disclosure: none
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