Insiders and Hedge Funds Betting Strong on American Eagle Outfitters (AEO)

Last week, two insiders at American Eagle Outfitters (NYSE:AEO) acquired stock of the company. On Jan. 24th, Jay Schottenstein, Executive Chairman Of The Board acquired 500,000 shares of Common Stock (without par value) at a price of $12.84 per share. Mr. Schottenstein now owns about 12 million shares indirectly, through SEI, Inc., Schottenstein SEI, LLC, and another LLC, in which Mr. Schottenstein’s wife is the sole trustee.

Also on Jan. 24th, Joseph Noel Spiegel, Board Director, acquired 5,000* American Eagle Outfitters (NYSE:AEO) shares of Common Stock for a price of $13.21 per share. He now holds 15,000 shares directly, plus these 5,000 shares, owned by a trust of which Mr. Spiegel is a co-trustee.

Chuck Royce

American Eagle Outfitters (NYSE:AEO) is a mid-cap apparel store and specialty retailer that operates in the United States, Canada, and online at ae.com. Its stock trades at 15 times the company’s earnings, a considerable discount in relation to its peers’ mean of 19.8x. However, most analysts tend to recommend holding this stock, mainly on account of its below-average long-term EPS growth projections. In addition, the stock pays out a generous dividend yield, projected at 3.92% of the current stock price.

On the other hand, a few research firms have recently upgraded American Eagle Outfitters (NYSE:AEO). These are the cases of B. Riley & Co. and Janney (research firms), both of which upgraded the company from a neutral to a buy recommendation about a month ago.

Both purchases follow the abrupt departure of the company’s CEO, Robert Hanson, on the evening of Jan. 22nd. After Hanson left, Schottenstein was appointed as the interim CEO until the Board finds a definitive replacement. I should highlight that Schottenstein had previously held the position of CEO for a decade, until he resigned in 2002.

It seems to me like Mr. Schottenstein is trying to provide some confidence to investors with his $6.42 million purchase. Mr. Spiegel, on the other hand, seems to have just taken advantage of the marked price decrease, as the stock price fell strongly on the couple of days following the CEO’s resignation. Although it recuperated some of the lost ground on Monday´s trading, it still looks quite cheap, trading close to the lower end of its 52-week range (12.59-22.63).

Furthermore, it is not only insiders that are betting on American Eagle Outfitters (NYSE:AEO). Chuck Royce’s Royce & Associates – the largest “hedgie” bull – currently holds more than 12.07 million shares, which represent around 6% of the company’s stock. However, Royce trimmed its exposure to the company at the end of last month, previously owning 13.25 million shares.

In addition, several major hedge funds like Joel Greenblatt‘s Gotham Asset Management and Green Arrow Capital Management hold stakes in the worth several million dollars, which were upped during Q3.

* “These shares are held in trust for the benefit of the reporting person’s spouse and child. The reporting person’s spouse is a co-trustee of the trust.” (Sec.gov)

 

Disclosure: Javier Hasse holds no position in any stocks mentioned

Recommended Reading:

3 Stocks with Multiple Insiders Purchasing: Alcoa Inc (AA), American Realty Capital Properties Inc (ARCP), MVC Capital, Inc. (MVC)

3 Stocks That Both Warren Buffett and Insiders Like (and a Bonus Track)

Board Director Buys Shares of General Electric Company (GE)

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!