Why Penn Virginia, Hanesbrands, and zulily Jumped Today

Wednesday proved to be another example of the resiliency of the bull market in stocks, as major market benchmarks bounced back from yesterday's losses to regain a substantial chunk of their lost ground. Even though U.S. GDP figures for the first quarter got revised downward to an ugly drop of 2.9%, few investors believe that the decline is anything but a one-time seasonal aberration. Helping to lead the market higher today were stocks from a number of different industries, including Penn Virginia (NYSE: PVA  ) , Hanesbrands (NYSE: HBI  ) , and zulily (NASDAQ: ZU  ) .


Source: Paul Lowry, Flickr.

Penn Virginia climbed 12% after the oil and gas production company got a wake-up call from investor George Soros, who owns about 9% of the company. Soros has said that he believes that Penn Virginia needs to put itself up for sale in order to maximize shareholder value, and if Penn Virginia doesn't do so, then Soros will have to take further action that could result in a proxy fight or other activist-investor activity. Soros also cited alleged mistakes by Penn Virginia management, which included privately offering convertible securities in a manner that diluted existing shareholders, and failing to make best use of the proceeds of that sale. Given the huge promise in energy, Soros' move shows that Penn Virginia, and similarly situated companies, can't afford just to move slowly without a firm strategy for the future.

Hanesbrands gained 9% as the apparel maker made its own foray into the mergers and acquisitions market, agreeing to buy French lingerie manufacturer DBApparel in an all-cash deal that values the company at about 400 million euros on an enterprise basis after adjusting for DBApparel's balance-sheet cash and outstanding debt. The acquisition will give complete control of the valuable Wonderbra and Playtex brands to Hanesbrands, and the combined company will enjoy some cost savings from production synergies, as well as giving Hanesbrands the ability to expand into uncharted territory in Europe. The deal shows that not all M&A activity involving international brands is motivated by tax considerations, as Hanesbrands didn't announce any intent to try to shift its headquarters abroad as a result of the merger.

Source: zulily.

For zulily, today's 9% rise came after the flash-sale specialist got an upgrade from a major Wall Street firm. Analysts argued that, after a dramatic drop in the value of zulily stock during the past several months, the shares now look like an attractive value proposition, especially given the steep growth trajectory of zulily's revenue in recent years. With moves to expand its growth efforts, zulily appears to have plenty of ways to seek to take maximum advantage of its e-commerce opportunity, and value-seeking investors appeared to appreciate that fact today.

Leaked: This coming consumer device can change everything
Imagine the multi-billion dollar sales potential behind a product that can revolutionize the way the world shops and interacts with its favorite brands every day. Now picture one small, under-the radar company at the epicenter of this revolution that makes this all possible. And its stock price has nearly an unlimited runway ahead for early, in-the-know investors. To be one of them and hop aboard this stock before it takes off, just click here.  


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3008394, ~/Articles/ArticleHandler.aspx, 10/31/2014 2:16:21 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement