Bath & Body Works (NYSE:BBWI) stock rose 5% overnight after Dan Loeb’s Third Point LLC hedge fund raised its stake, seeking changes in executive compensation.
Third Point now owns 6.02% of the personal care retailer, according to a 13D document filed with the Securities and Exchange Commission (SEC). The stock was bought at an average price of $38.15.
BBWI stock opened on this morning, Dec. 9, at $42.58/share, with a market capitalization of about $9.8 billion.
What Loeb Wants
Loeb has a history of buying into companies and demanding change. Third Point started in 1995 with $3.3 million. The company’s most recent financial statements showed it managing assets of $5.5 billion.
Most Third Point investments are passive, with over 42% held in just three stocks — personal goods conglomerate Colgate Palmolive (NYSE:CL), medical products conglomerate Danaher (NYSE:DHR) and California utility company PG&E (NYSE:PCG).
Loeb is known for writing letters charging management with greed and channeling what others on Wall Street feel. One of his early successes was making Marissa Mayer CEO of Yahoo a decade ago.
The Bath & Body Works filing is typical. It says Third Point wants to rein in executive pay and improve transparency. It threatens to demand board changes if its demands aren’t met.
Bath & Body Works is the surviving piece of what was once The Limited, a retail empire built by Les Wexner. It came public under its current name last year, after splitting off Victoria’s Secret (NYSE:VSCO), the last clothing brand of what was then called L Brands.
In its most recent quarter, Bath & Body Works reported a net income of $91 million, 40 cents per share, on revenue of $1.6 billion. The results were better than the previous guidance. Before those results, the stock was trading 60% below where it started in 2022. It’s now down about 40%.
BBWI Stock: What Happens Next?
Bath & Body Works stock had considerable selling and buying by insiders early this year, including CEO Martin Waters. Institutional holders like Third Point now own about 60% of the common stock. Loeb is likely to get a positive hearing.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.