Shares of Macy’s (NYSE:M) are up by about 18% after the retailer received a buyout offer for $5.8 billion from Arkhouse Management and Brigade Capital Management, according to sources familiar with the matter. The buyout price represents a per share price of $21, about 21% higher than M stock’s closing price of $17.39 on Friday.
Arkhouse and Brigade believe that Macy’s is currently undervalued. The investor group has stated that it is willing to raise its offer pending the completion of due diligence. In addition, the group has already proposed the offer to the retailer, which resulted in its board of directors initiating a meeting. It’s not yet clear if Macy’s will accept the offer.
Arkhouse already owns a stake in M through its managed funds. The firm primarily operates as a real estate investment firm that “takes a private equity approach to its public market investing.” Meanwhile, Brigade is an alternative asset investment firm with a fundamental investment approach.
Macy’s has struggled throughout the years due to the rise of e-commerce and the reduction of foot traffic in traditional malls. Its shares are down by about 35% during the past five years.
5 Investors Betting Big on M Stock
Tracking institutional ownership is important, as these large investors provide liquidity and support for stocks. During the third quarter, 365 13F filers disclosed a stake in M stock, a decline of two filers from the prior quarter. However, the total shares owned by these filers declined by 2.29% to 219.88 million from 225.03 million. Only one of these filers owns Macy’s in their top 10 positions, RP Investment Advisors, with its 25,000 share stake.
Hedge funds, whose data is included in 13F data, were more bearish. Total shares owned by hedge funds fell by 11.85% to 77.27 million from 87.66 million.
With that in mind, let’s take a look at Macy’s top five shareholders:
- Vanguard: 36.38 million shares. Vanguard acquired 2.64 million shares during Q3.
- BlackRock (NYSE:BLK): 25.90 million shares. BlackRock acquired 1.10 million shares during Q3.
- State Street (NYSE:STT): 11.34 million shares. State Street acquired 104,780 shares during Q3.
- Arrrowstreet Capital: 11.32 million shares. Arrowstreet acquired 2.01 million shares during Q3.
- Dimensional Fund Advisors: 10.71 million shares. Dimensional sold 1.32 million shares during Q3.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
