Point72 Asset Management founder Steven Cohen (Trades, Portfolio) established a large stake in Build-A-Bear Workshop Inc. (BBW, Financial) on Feb. 17.
Cohen founded his firm in 2014 as a successor to SAC Capital. He utilizes a fundamental, bottom-up approach to identify discretionary long-short equities. His current portfolio consists of 668 stocks and is valued at around $14.2 billion.
The billionaire investor purchased 2,341,479 shares of Build-A-Bear for an average price of $10 per share. This represents nearly 14.8% of the company’s outstanding shares and is 0.16% of Cohen’s total assets managed.
Build-A-Bear is a popular specialty retailer of plush animals and related products. The company enables customers to build and create personalized stuffed animals to serve as lifelong friends. It also provides clothing and accessories to further add to the fun. The company offers special edition characters such as Belle and Beast in honor of Disney’s (DIS, Financial) upcoming live-action adaptation of “Beauty and the Beast.” In addition, to commemorate its 20 years in business, it has released a limited edition Birthday Celebration Bear.
The St. Louis-based company has a market cap of $141.1 million; its shares were trading around $8.90 on Thursday with a price-earnings (P/E) ratio of 127.14, a price-book (P/B) ratio of 1.4 and a price-sales (P/S) ratio of 0.4.
The Peter Lynch chart below shows the stock is trading above its fair value.
GuruFocus ranked the company’s financial strength 8 of 10. The moderate Piotroski F-Score of 4 and Altman Z-Score of 3.34 suggest the company is stable with no fiduciary stress. The company also has no debt.
The company’s profitability and growth was ranked 4 of 10 by GuruFocus. It has an operating margin of 1.5% and a net margin of 0.4%. The return on equity (ROE) and return on assets (ROA) underperform 66% and 64% of other companies in the global specialty retail industry. Similarly, the return on capital (ROC) underperforms 61% of competitors.
Build-A-Bear does not pay a dividend.
With his purchase, Cohen became the company’s largest shareholder among the gurus. Jim Simons (Trades, Portfolio) and Chuck Royce (Trades, Portfolio) also hold the stock.
Consumer cyclical stocks have a combined weight of 17.6% in Cohen’s portfolio.
Disclosure: I do not own any stocks mentioned in the article.
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