The Wet Seal Inc. (WTSL): Clinton Group Reduces Stake by 17% Amidst Declining Stock Price Environment

Greg Taxin’s Clinton Group disclosed today a 17% reduction in its stake in The Wet Seal, Inc. (NASDAQ:WTSL). According to an Amended Schedule 13D filed with the SEC, the funds affiliated to Mr. George E. Hall, Chief Executive Officer at Clinton Group, own, in aggregate, 5.04 million shares of Class A Common Stock (including options to purchase 506,400 shares of Class A Common Stock), of which Mr. Hall may be deemed beneficial ownership. The fund had disclosed ownership of 5.9 million shares on early-September, but only 3.86 million by the end of the second quarter. The current position accounts for approximately 6% of the company’s outstanding stock, and makes of Clinton Group the largest institutional investor (amongst those we track) in the company.

Clinton Group is a New York-based investment advisory firm that invests globally across multiple alternative investment strategies. It was founded in 1991 by Greg Taxin, who is now the President, and currently manages more than $1.5 billion in assets.

The Wet Seal, Inc. (NASDAQ:WTSL) is a $46 million market cap national multi-channel specialty retailer selling fashion apparel and accessory items designed for female customers through its stores and e-commerce websites. Over the past month, Clinton Group has been very active in relation to its stock (I should highlight that Mr. Taxin serves as a Board Director in the company and, thus, could hold more information than the average institutional investor). The fund has been buying and/or selling almost every day amidst a low price environment –the stock is down about 80% year-to-date. Since September 2, the stock price plummeted about 48%, following the news of the resignation of its Chief Executive Officer, John D. Goodman. A month later, the company’s Chief Financial Officer, Steven H. Benrubi, also made his resignation public –it will become effective as of December 1.

Another major institutional investor trimming its exposure to The Wet Seal, Inc. (NASDAQ:WTSL) is Joe Huber’s Huber Capital Management, which last acknowledged (by the end of the second quarter) having reduced its stake in the company by 31%, to 2.73 million shares.

Unlike these funds, Adam Rothstein, Board Director at The Wet Seal, Inc. (NASDAQ:WTSL), acquired 25,000 shares of the company over the third quarter of the year, spending more than $17,000.

Disclosure: Javier Hasse holds no positions in any stocks or funds mentioned

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