Shares of department store Dillard’s surged close to 30% on Monday after a regulatory filing revealed that Ted Weschler, one of the highest ranking money managers at Warren Buffett’s storied conglomerate and investment vehicle, Berkshire Hathaway, owns a nearly 6% stake.
Released just minutes after the market-close on Friday, a filing with the Securities and Exchange Commission revealed that Ted Weschler, a Berkshire money manager who many believe could be the firm’s next chief investment officer, acquired shares in late September that pushed his personal holdings past the 5% ownership threshold required for public disclosure.
Weschler now owns 1,081,000 shares of Little Rock, Ark.-based Dillard’s–equal to roughly 5.89% of the firm’s shares outstanding, the filing notes.
Shares of Dillard’s soared as much as 40% on Monday, pushing the firm’s market capitalization well past $1 billion, and settling at about $53.45 per share, 27% higher than Friday’s closing prices.
Dillard’s stock is still down nearly 25% for the year, but the retailer is now doing much better than its peers: The S&P 500 Department Stores Index is down about 54% in 2020.
Public filings show that Weschler also has substantial personal stakes in healthcare company DaVita and Liberty Media Corp, which owns stakes in SiriusXM, the Atlanta Braves and Formula One; both are firms in which Berkshire also has large stakes.
Berkshire has no reported stake in Dillard’s.
Like other department stores this year, Dillard’s has been slammed by the coronavirus pandemic. Total sales in the firm’s most recent quarter dropped by 35% year-over-year to $945 million, which was in line with expectations, but the firm’s loss in the quarter, of 37 cents per share, was more than 90% better than Wall Street expected. Wedbush analysts led by Jen Redding note that the company’s tightly controlled inventory has helped prop up the firm’s profit margin despite the blow to revenue, as other department stores, like Macy’s, struggle to get a handle of increased costs.
$58 million. That’s the approximate value of Weschler’s disclosed stake in Dillard’s as of market close on Monday.
“The personal investment by Ted Weschler, investment manager at Berkshire, likely lends legitimacy behind the increasing momentum we’re seeing in Dillard’s third-quarter business,” noted Wedbush’s Redding, who reiterated a neutral rating for Dillard’s stock on Monday, in an email to Forbes, adding that current short interest levels indicate the Monday price increase is likely due to investors, previously looking to profit off a dip in Dillard’s stock, who are now cutting their short positions, meaning they’re buying borrowed shares to cut losses or secure gains on the possibility that Dillard’s shares could actually be on the way up.
What To Watch For
Dillard’s third-quarter earnings. They’re set to be released on November 12. Wedbush is forecasting third-quarter sales of $1.25 billion, down 12% year over year and slightly higher than $1.2 billion consensus estimates.
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