Many leading funds filed forms 13-D and 13-G (and form 4) with the SEC this week, including T Rowe Price, Capital Research Global Investors, Wellington Management and FMR LLC, indicating that they had amended their ownership in U.S. traded public companies operating in the consumer and retail sectors. The forms are required to be filed within ten days, so the institutions traded these shares sometime during and after the last few days of December. Also, we have included, when applicable, SEC Form 4 filings by Institutions that are considered corporate insiders by virtue of their holding more than 10% ownership, and in many cases having representation on the Board of Directors. The following are the most notable filings in the consumer and retail sectors this week (for more info on Forms 13-D and 13-G, and how to interpret that, please refer to the end of this article):
Barnes & Noble Inc. (NYSE:BKS): BKS that made its name as the operator of retail bookstore chain Barnes & Noble with over 1,300 bookstores in 50 states selling books, magazines, and music, is rapidly transforming into a content, commerce and technology company. Now it provides access to books, magazines, newspapers and other content through its multi-channel distribution platform, including via the NOOK eBook Reader devices. On Monday, Daniel Tisch filed SEC Form SC 13G indicating that he holds 3.1 million or 5.1% of outstanding shares, including 1.5 million in the name of TowerView and another 1.6 million in the name of DT Four Partners. TowerView is the personal investment company of Tisch, the son of billionaire Wall Street investor and former CEO of CBS television, Lawrence Tisch, and it owned 1.2 million shares of BKS at the time of its 13-F Q3 filing. BKS currently trades near its lows, and gapped down just last Thursday after it announced that it would be spinning off its Nook digital business after that unit's sales grew 70% year-over-year. Its shares gapped down as investors were concerned that the planned spinoff of Nook would affect business at its brick-and-mortar B&N stores.
Youku.com Inc. (NYSE:YOKU): YOKU, China's largest video-streaming company, is more popularly known as the YouTube of China. But in reality, it is more a combination of Netflix and YouTube; Netflix, because it offers mostly professionally-generated content licensed from movie studios and TV companies, and YouTube due to its reliance on advertising as a main source of revenue. On Tuesday, Denver, CO-based Marsico Capital Management, with over $31 billion in assets under management, filed SEC Form SC 13G/A indicating that it held 3.8 million or 4.9% of outstanding shares, a drop from the 4.8 million shares that Marsico held at the time of its Q3 13-F filing. YOKU currently generates losses every quarter, and it currently trades near its lows, and at 3.2 P/B and at 18.3 PSR versus averages of 1.8 and 2.9 respectively for its peers in the internet content group.
Zynga Inc (NASDAQ:ZNGA): ZNGA develops, markets and operates online social games such as CityVille, FarmVille, FrontierVille, and others, making them available worldwide on various platforms, including Facebook, MySpace, and Yahoo, as well as the iPad, iPhone, and Android devices. On Tuesday, mega funds T Rowe Price and Capital Research Global Investors filed SEC Forms SC 13G indicating that they had amended their ownership of ZNGA; T Rowe Price reported owning 11.5 million shares and Capital Research reported owning 11.7 million shares.
Also, earlier last weekend we reported that Morgan Stanley filed an SC 13G last Friday indicating that it increased its ownership of the company shares. ZNGA, which debuted at $10 and traded as high as $11.50 on the opening day, is now trading firmly below the offer price and testing the lows. The concern here is that the valuation of over $7 billion at the offer price was just too high, with most of the value having been captured by private investors prior to the IPO. Furthermore, there is also uncertainty as Zynga's business model is still evolving, as although it has over 150 million monthly users, it depends mostly on a limited number of big spenders ("whales"), with the rest paying nothing.
JetBlue Airways Corp. (NASDAQ:JBLU): JBLU provides passenger airline service to 63 destinations in 21 states, Puerto Rico, and Mexico; and 10 countries in the Caribbean and Latin America. On Tuesday, Wellington Management, with over $260 billion in equity assets under management at the end of Q3, filed SEC Form SC 13G/A indicating that it held 31.8 million or 10.7% of outstanding shares, an increase from the 0.6 million shares it held at the end of Q3. JBLU has been in a strong rally mode recently, up almost 70% in the last few weeks, boosted by positive comments by some analysts on the basis that it would be among the big winners in an AMR bankruptcy. Currently, after the recent surge, it still trades at a fair 11-12 forward P/E and 1.0 P/B compared to the averages of 11.0 and 1.6 respectively for its peers in the airline group.
United Continental Holdings (NYSE:UAL) provides air transportation for passengers, freight and mail with over 5,675 flights daily to over 372 airports on six continents. On Tuesday, FMR LLC filed SEC Form SC 13G/A indicating that it held 24.3 million or 7.3% of outstanding shares, a decrease from the 26.5 million it held at the end of Q3. Earlier in December, Capital World Investors also filed a 13G/A, however it increased its holdings in UAL to 36.1 million shares from the 28.1 million it held at the end of Q3. UAL shares trade at a very attractive 3-4 forward P/E and 2.8 P/B compared to averages of 11.0 and 1.6 respectively for its peers in the airline group. Furthermore, a number of analysts, including at Ticonderoga and JP Morgan, have recently come out in support of the stock. We agree that the stock is attractive on a relative valuation basis.
Dana Holding Corp. (NYSE:DAN): DAN is a manufacturer of modules, axles, chassis, suspension and drive-shafts for automotive OEMs. On Tuesday, FMR LLC filed SEC Form SC 13G/A indicating that it held 1.5 million or 1.0% of outstanding shares, a decrease from the 6.6 million shares it held at the end of Q3. DAN trades at a discount 7-8 forward and 2.2 P/B compared to the averages of 8.7 and 2.7 for its peers in auto/truck OEM group.
On top of these, some additional 5% ownership SEC Form 13-D and 13-G filings on major stocks earlier this week include a 13G/A by Royce & Associates on Thursday reiterating that it holds 368,100 convertible preferred securities, the same as that indicated in its 13-F Q3 filing, of home builder Hovnanian Enterprises (NYSE:HOV); Blackrock's filing on Tuesday that it held 8.1 million shares of Wabash National Corp. (NYSE:WNC), a provider of standard and customized truck trailers and related transportation equipment, an increase from a total of 6.0 million shares reported by five Blackrock funds in HOV stock at the end of Q3; and another filing by Royce & Associates that it held 3.7 million or 6.6% of outstanding shares of furniture manufacturer Furniture Brands Intl (FBN), an increase from the 3.5 million shares it held at the end of Q3.
Credit: Fundamental data in this article were based on SEC filings, I-Metrix® by Edgar Online®, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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