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Sally Jones
Sally Jones
Articles (580) 

Hawk-Eyed Gurus on Safeway and Blackhawk

April 01, 2013 | About:

With a market cap of $6.16 billion, Safeway Inc. (SWY) is one of the largest U.S. supermarket chains and a little surprisingly, a technology leader. The company continues to increase its U.S. market share with customizable customer interfaces offered via smartphones. Safeway Inc. was among the first to convert discount coupons into deals offered through an iPhone or Android app. More than its competitors, Safeway leadership grabbed on to new technology to radically transform the grocery business: They found new ways to meet consumers glued to smartphones. According to GuruFocus research, the company had seen its market cap reduced by almost half in the past five years leading to year-end 2012, but has since seen a dramatic 40% increased year to date.

Safeway’s technology savvy results in another boost for the chain grocer. Its new gift card and prepaid payment service unit, Blackhawk Network Holdings Inc., filed a registration with the U.S. Securities and Exchange Commission in mid-March to raise $200 million in an initial public offering of its Class A common stock, with the ticker: HAWK.

Blackhawk was created as one of the largest third-party gift-card distributors in the world. Soon to retire, Safeway’s CEO Steve Burd is credited with the Blackhawk vision as a “leading prepaid payment network utilizing proprietary technology to offer a broad range of gift cards, other prepaid products and payment services in the United States and 18 other countries.” Estimating 160 million visits per week, Blackhawk Network Holdings Inc. unifies over 500 consumer brands and more than 100,000 retail locations.

As for now, Safeway Inc. (SWY)'s 12-month growth rate is 41.2% per share. The company has a market cap of $6.17 billion. The P/E is 10.4 and the P/S is 0.1. The current SWY price is $26.35, up 63% from average. Here are the 10-year financials for Safeway Inc.

Here’s a look at a few Gurus who have benefited from the hike:

Investor genius Edward Lampert, CEO of Sears Holdings Corporation and founder of ESL Investments, bought a new SWY holding as of quarter ending Dec. 31, 2012. The stock ended up being Lampert’s best-performing fourth quarter buy with a 52% gain.

Lampert’s holding history:

Guru Ray Dalio had increased his Safeway Inc. position by 41.47%, last fall, quarter ending Sept. 30, 2012, with holdings of 2,642,818 shares. He then reduced his position by 55.44% in quarter ending Dec. 31, 2012, with current shares at 1,177,588. His gains have been in the green in every quarter since first quarter 2009. After buying and selling SWY since second quarter 2008, Dalio’s average cost was $22 per share, gaining 17%.

His holding history:

Guru Joel Greenblatt also made a 52% gain on SWY since he bought in fourth quarter 2010, averaging a cost of $17 per share.

His holding history:

Here’s a look at Guru traders who sold out their SWY shares.

The question is now whether —and how — HAWK will continue to impact Safeway in the future.

About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 3.2/5 (5 votes)


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