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Lone Pine Capital Buys Hong-Kong Listed Esprit Holdings

Esprit Holdings Ltd (HKG:0330) jumped to a three-week high after Stephen Mandel‘s Lone Pine Capital increased its holding in the company. The stock closed at $11.00 a share on Tuesday after closing at $9.83 the day before. Lone Pine increased its position in the company from 3.22 percent to 6.23 percent, making it the second largest shareholder in the company. State Street Corp (STT) is the largest shareholder at 6.41%.

LONE PINE CAPITAL

Lone Pine Saves the Day for Esprit

After Lone Pine increased its position in the company, Esprit was able to bounce back from the decrease in share price that came after it announced  on September 15 that its year profit had fallen 98 percent. Analyst Kenny Tang, AMTD Financial Planning Ltd., explained, “The stake increase by the hedge fund is certainly a factor driving the share price.” He reasoned, “It may spur the idea that further purchases could be on the way.” Lone Pine bought 38.9 million shares on October 4, 2011 at an average price of HK$9.50, according to a disclosure filing to the Hong Kong stock exchange.

Esprit Plans for a Brighter Future

Esprit’s sharp decrease in profits stems from a decline in European revenue, which has historically represented the bulk of its sales. It is also facing increased competition from rivals like Hennes & Mauritz AB (HMB) and Zara, the popular brand owned by Inditex SA (ITX). In a bid to regain its soul, Chief Executive Officer Ronald Van der lans to more than double sales in China by focusing its efforts more on the growing Chinese economy. Van der lans plans to spend HK$6.8 billion on branding alone, concentrating at least one-third of its marketing efforts toward China.

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