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CONN’S, Inc. (CONN): Is Luxor Capital Group Planning Something?

Christian Leone’s Luxor Capital Group filed an amended 13D with the SEC today. The activist hedge fund changed the purpose of transaction of its acquisition of 1.95 million shares of CONN’S, Inc. (NASDAQ:CONN). As reported by us in an earlier article, Luxor Capital Group had increased its stake in the company by buying 1.95 shares in the range of $29.39 to $30.78 per share at the end of September.

Luxor Currently owns 20.9% of all common stock or 7.58 million shares of CONN’S, Inc. (NASDAQ:CONN). The hedge fund hasn’t revealed any specific plans for the company as of yet, but this change in purpose of transaction can be a sign for just that. At the end of the second quarter of 2014, Luxor Capital held only 2.95 million shares of CONN’S, Inc. (NASDAQ:CONN), according to its 13F filing. However, the fund started purchasing huge quantities of the stock in the third quarter, when it tanked from $50 levels to $30 levels.

Christian Leone

CONN’S, Inc. (NASDAQ:CONN) stock is down more than 63% since the start of this year and currently trades at 10.79 times earnings, which is significantly lower than most of its peers in the specialty retailing industry. 91% of all common stock of the company are currently owned by institutional investors, which can be attributed to the low valuation at which the company trades right now and also makes it an ideal takeover target.

David Einhorn’s Greenlight Capital is another major hedge fund that is bullish on CONN’S, Inc. (NASDAQ:CONN). As of June 30, 2014, Greenlight Capital owns exactly 3.5 million shares of the company, which is an increase by of 7% quarter-on-quarter. In his 2014 Q1 letter to investors, Einhorn revealed his new position in CONN’S, Inc. (NASDAQ:CONN) and also mentioned why he is bullish on the stock.  You can download Greenlight Capital’s 2014 Q1 investor letter here (see also our hedge fund investor letters group).

Disclosure: None

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