CONN’S, Inc. (CONN): Luxor Capital Boosts Stake to 13%

Christian Leone‘s Luxor Capital Group is bullish on CONN’S, Inc. (NASDAQ:CONN), and has boosted its exposure to the company. According to a new filing with the Securities and Exchange Commission, Luxor revealed ownership of some 4.56 million shares of Conn’s, up from around 2.95 million shares disclosed earlier, in its 13F filing. Following the increase, Luxor’s passive stake amasses 12.6% of the company’s common stock.

Christian Leone

In fact, Mr. Leone is not the only one who likes CONN’S, Inc. (NASDAQ:CONN). David Einhorn‘s Greenlight Capital also owns 3.5 million shares of the company as of the end of June, raising its position by 7% during the second quarter. Greenlight has initiated a stake in the company during the first quarter of the year, and Conn’s has been one of the highlights in Greenlight’s letter to investors for the first quarter of the year.

CONN’S, Inc. (NASDAQ:CONN) is a retailer of appliances, furniture, mattresses and electronics, operating almost 80 locations in Texas and other Southwestern states. Around 80% of the customers’ purchases are financed through Conn’s proprietary subprime credit portfolio. Mr. Einhorn emphasized in the letter, that Conn’s has reported a 33% comparable store sales growth during the last quarter of 2013, and has strong margins. He also mentioned that CONN’S, Inc. (NASDAQ:CONN) has the potential to reach 15-20% unit growth.

CONN’S, Inc. (NASDAQ:CONN)’s stock is trading at around $30 per share, dropping by over 60% since the beginning of the year. In the letter, Mr. Einhorn stated that the stock slumped due to the fact that the company reported an increase in credit losses and reduced its earnings guidance to $3.40-$3.70 from $3.80-$4.00 for the current year. Nevertheless, Greenlight is bullish on the stock because they consider that the market overreacted to the bad news delivered by the company.

In the meantime, CONN’S, Inc. (NASDAQ:CONN) has delivered solid results for the second quarter of its fiscal 2014. The company reported a 30.4% increase in revenues, which amounted to $353 million, while its same stores growth amounted to 11.7%. In addition, the adjusted retail segment operating income jumped 39.1% to $35.7 million, while the credit segment operating income fell to $0.2 million, which represents a loss of $7.7 million.

Disclosure: none