Luxor Capital Group Raises Stake and Goes Activist on BJ’s Restaurants, Inc. (BJRI)

Only over a month after initiating a stake, Christian Leone and his fund, Luxor Capital Group, have raised their stake in BJ’s Restaurants, Inc. (NASDAQ:BJRI) to 2.75 million shares, from 1.78 million disclosed previously. At the same time, now holding almost 10% of the common stock, Luxor changed the nature of its stake to activist.

Christian Leone

Moreover, Luxor entered into an agreement with Patrick Walsch’s PW Partners Atlas Funds and Jeffrey C. Neal of Horizon Capital, under the terms of which, the parties formed a group and together plan to seek representation on BJ’s Restaurants, Inc. (NASDAQ:BJRI)’ Board of Directors. Altogether the group holds over 3.5 million shares, equal to 12.4% of the outstanding stock.

As a first step, PW Partners Atlas Fund II has nominated Jason G. Bernzweig, Mark A. McEachen, Jeffrey C. Neal, Emanuel R. Pearlman and Patrick Walsh to be elected to the Board of Directors of BJ’s at the next annual meeting of stockholders.

Following the recent increase, Luxor is one of the most significant shareholders of BJ’s Restaurants, Inc. (NASDAQ:BJRI). Another bullish hedge fund is Ken Griffin’s Citadel Advisors, which a couple of weeks ago also inched up its position to almost 1.21 million shares, from below 2.0 million held previously.

BJ’s Restaurants, Inc. (NASDAQ:BJRI) currently trades 32 times its estimated earnings for the next 12 months. The last year hasn’t been a particularly successful for the company as it has posted EPS of $0.75, down from $1.23 reported a year ago. The company has missed the estimates for the last three quarters, and, in the October-December period alone showed a 90% drop in net income.

Amid these developments, the analysts currently appreciate the stock as a ‘Hold’, while Piper Jaffray recently downgraded the stock to ‘Neutral’ and reduced the target price to $27. In addition, several other analysts also lowered their target prices and downgraded the stock of BJ’s amid weak financial results. The stock has been down by 11% since the beginning of the year.

The Services sector amasses a significant part of Luxor’s equity portfolio, although BJ’s Restaurants, Inc. (NASDAQ:BJRI) is the only Restaurant operator held currently by the fund in its 13F portfolio.

Disclosure: none

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