Hunting chain Cabela’s bags an activist investor
Steve’s breakdown: “Activist investing” is the new phase that has entered into the new business lexicon. We follow them because they make things happen. That’s their plan. Cabela’s could use a boost and everyone knows advertising helps retail. (Period)
SIDNEY, NE: Paul Singer has gone hunting for small game.
The billionaire hedgie, who runs $27 billion Elliott Management, revealed on Wednesday he has taken an 11 percent stake in Cabela’s, the 77-store retailer of hunting rifles and other outdoor recreational paraphernalia.
Shares jumped 17.6 percent, to $39.78, after Elliott suggested in a filing that the $2.32 billion market cap company might be a target for private equity.
Elliott, whose activist portfolio is run by Jesse Cohn, is known for effective pushing sales of the companies in which it takes activist stakes.
But Cabela’s isn’t likely to add much to Elliott’s bottom line. It paid $152.3 million for 7.68 million shares, according to calculations from 13DMonitor, which would mean it has made $20.6 million as of Wednesday’s close.
The Sidney, Neb.-based chain may be ripe for action, as it has hit a rough spot. Third quarter earnings were down 18.8 percent over the year-earlier quarter.
Cabela’s shares have fallen 25.5 percent this year.
Elliott has had a lackluster year, but it is heavily hedged and has outperformed its peers during the downturn that started in August.
As of Sept. 30, Elliott’s hedge funds were up around 2.5 percent, according to investors.