Why Shares of Ann, Inc. Popped

Is this meaningful or just another movement?

Mar 21, 2014 at 2:15PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Ann, Inc. (NYSE:ANN) were looking stylish today, gaining as much as 12% after a private equity firm disclosed a stake in the women's clothing retailer.

So what: Golden Gate Capital revealed in a regulatory filing that it had taken a 9.5% ownership stake in the parent of the Ann Taylor family of stores. Golden Gate Capital has a reputation as a savvy retail investor, having helped turn around brands such as Eddie Bauer and Zale in the past. Ann is not struggling, however, and Golden Gate said it would not seek any significant changes to the board or the company's structure. In a brief statement, Ann's management touted its record of two consecutive years of record earnings and four consecutive years of positive comps, and said it welcomes new investors.  

Now what: Given that Golden Gate seems to have no aspirations to shake up the company, shares seem to be rising simply from its vote of confidence and declaration that shares are significantly undervalued. The private equity firm had talked to management on the phone earlier this week, and said it believed the company was "a great business, with a thoughtful strategy, led by an extremely competent management team who has a long track record of success." Ann shares approached an all-time high on the news as investors seem to agree with Golden Gate's praising words. 

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