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Southeastern Asset Management, Now Saks Fifth’s Largest Shareholder

December 12, 2012 | About:
Investor Mason Hawkins’ Southeastern Asset Management, which is the adviser to Longleaf Partners Funds, has claimed the title of majority shareholder of luxury retailer Saks Inc. (SKS). On Dec. 10, Southeastern filed a 13G form to the SEC reporting a total shareholding of 26,976,320 shares, and ownership of 17.8 percent. In the third quarter, the firm only owned about 21.7 million shares of Saks, representing only 14.19 percent ownership. The latest transaction boosted Southeastern’s holding by 5.3 million shares.

Southeastern first acquired Saks in the third quarter of 2008, starting off with 9.5 million shares, purchased at an average price of $10.49. By the following quarter, the fund sold out as the stock plummeted to its all-time low. Saks recuperated by the start of 2009, rising in value for the next two years.

In the third quarter of 2011, Southeastern once again purchased shares of Saks amounting to 13.6 million shares, and then consecutively trading in the quarters that followed.

With a market cap of $81.5 million, Saks Inc. is the operating company of 45 Saks Fifth Avenue stores, as well as 65 OFF 5th stores and its e-commerce site, saks.com. Its stores are known for selling high-end fashion apparel, accessories and cosmetics.

Today, Saks stock is down 2.21 percent, trading at the price of $10.60.

In November, Saks announced its third quarter results, presenting year-over-year rises in total sales and consolidated inventories, above all. The company had about $74.2 million of cash on hand by the end of the quarter, and no direct outstanding debt in its revolving credit facility.

The company also repurchased a small amount of its common stock, which incurred a total year-to-date repurchase amount of $79.1 million (about 8 million shares) at an average price per share of $9.90.

Funded debt at the end of the quarter totaled approximately $404.8million, and debt-to-capitalization was 25.9% (without giving effect to cash on hand).



“In spite of the continued uncertain macro environment, we were pleased to post a modest year-over-year increase in operating income and net income for the third quarter,” Stephen I. Sadove, Saks chairman and CEO, said in the report. “Our comparable store sales increase of 3.3% in the third quarter was below our initial expectation but was on top of a very solid 5.8% comparable store sales increase in the prior year third quarter. On a year-to-date basis, comparable store sales increased 4.3%, and similarly, this was on top of very strong 10.3% increase in the first nine months of last year.”

Sadove reported to selling 162,500 of his company shares in November.

In the past 12 months, Saks’ 10-Year Financials show a revenue growth rate of 7.4 percent, despite a negative annual growth rate of 11.84 percent. Its book value, too, has increased by 4.9 percent in the past year, but has undergone a downward trend line in the past five years.

Year to date, Saks stock has gained in value by 11.18 percent.



GuruFocus gives Saks Inc. 1 star in Business Predictability, and 6 out of 10 in both Financial Strength and Profitability & Growth.

Its P/S ratio is close to its one-year low at 5.7, and its P/B ratio is 49.6.

Saks is one out of 41 stocks in Hawkins’ portfolio, whose sector weightings reveal that the financials and consumer services sectors are the majority.

Besides Hawkins, other Gurus who have Saks holdings include Bruce Kovner, Paul Tudor Jones and Westport Asset Management. (View its holding history with other Gurus at SKS: Holding History.)

About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website


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