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Express Down 10% on Weak Guidance and Ackman Praises NCL's Plea for Herbalife Investigation

March 13, 2013 | About:
U.S. markets are slightly positive in early trading after February retail sales numbers increased the most in five months, adding more bullishness to the current rally. The Commerce Department said on Wednesday retail sales increased 1.1% and revised the January figures to an increase of 0.2%. Economists were expecting an increase of 0.5%. After the report, stock futures turned green after initially indicating a red open.

Earnings

Shares of retailer Express (EXPR) are under pressure after the company reported EPS of $0.75 versus analyst estimates of $0.74. Revenue also beat analyst expectations. Shares tumbled after the company’s management gave its full year outlook which came in below analyst expectations. The retailer is expecting full year EPS between $1.40 to 1.54 while analysts were expecting EPS of $1.72. The company is blaming a slow start in the first quarter on lower consumer spending for the lower guidance. The stock is down more than 10% in early trading.

Gurus have been bullish on Express with several adding to existing positions. Gurus adding to or building a new position include:

Special Situations

The battle between Carl Icahn and Bill Ackman was turned up a notch on Tuesday. First, Carl Icahn added an additional 322,000 to his Herbalife (HLF).This is an addition to the 16 million shares he already owns. Under an agree with Herbalife’s board of directors (BOD), Icahn can purchase up to 25% of the shares outstanding and put two directors on its board.

At the same time, the National Consumers League (NCL) has called on the Federal Trade Commission to investigate Bill Ackman’s Pershing Square claim that Herbalife is indeed a pyramid scheme. Soon after, Pershing Square praised the NCL’s move in a statement:

“We are pleased that the National Consumers League, the nation’s oldest and one of the most respected consumer protection organizations, has requested that the FTC launch an investigation of Herbalife. We believe that a thorough investigation of Herbalife will reveal it to be a pyramid scheme that has harmed millions of consumers in more than 80 countries around the world.”

For the most part, Gurus have been net sellers of Herbalife. It wasn’t until last quarter and after Ackman’s large short position became public that a couple of Gurus became bullish. They are:

Shares of Boeing (BA) are mixed after the Federal Aviation Administration (FAA) approved the company’s certification plan for the 787’s redesigned battery system. This will allow Boeing to test the new battery system and is the first step in a process to get the 787 in the air again. The FAA says the battery certification plan requires a series of tests, including flight tests, which must be passed before the 787 can return to service. Boeing’s 787 fleet was grounded in January following a battery fire in Boston. Soon after, another battery fire caused an emergency landing in Japan.

Gurus were net sellers of Boeing (BA) last quarter as a handful of them reduced their positions. Gurus who reduced or sold out include:

The one bull to pay attention to is Causeway Capital Management’s Sarah Ketterer who purchased Boeing in the third quarter of 2012. That purchase had a 2.5% impact to the portfolio, and she added to the position again in the last quarter.

Rating: 3.2/5 (6 votes)

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