As markets have been inching down on Tuesday, a particular stock took a pretty hard hit. After releasing its financial results for the third quarter, Conn's, Inc. (NASDAQ:CONN) stock slid by 41% in intraday trading, making the company the top loser on Tuesday. As investors have been unloading shares, the trading volume amounting to more than 6.1 million shares, which is almost 6 times more than the average volume, several investors who have been holding big positions in the company are more affected by the decline than others. So let's take a look at some of the investors that have been bullish on the stock so far, and see where they got it wrong.
However, before we get to that, let's see why Conn's, Inc. stock fell today. The company reported its financial results for the third quarter and posted a 19% increase in revenues on the year to $370.1 million. Both furniture and matress segment and appliances' sales went up by around 37% and 25% on the year, while retail gross margin grew 50 basis points to 40.6%. However, on the earnings side, the company reported a loss of $0.08 per share, versus $0.66 per share a year ago. The decline in profits came on the back of additional provisions for credit losses. Analysts expected earnings of around $0.68 per share on revenues of $377 million.
Two of the top shareholders of Conn's, Inc. are Christian Leone‘s Luxor Capital Group and David Einhorn‘s Greenlight Capital. Luxor has raised its stake by more than 150% during the third quarter to 7.59 million shares. At the end of September, Luxor acquired some 1.95 million shares and changed the nature of its stake to activist, even though the fund has not disclosed any plans regarding the company. The fund initiated a stake at the beginning of March, initially holding 2.0 million shares, while the stock declined by around 42% since then.
More interesting is the case of Greenlight Capital. The fund also added the company to its equity portfolio during the first quarter, initially holding 3.30 million shares, the company representing one of the fund's top small-cap picks. Over the following quarters, Greenlight raised its exposure to the company as the stock has been sliding. In its latest 13F filing, the investor disclosed holding around 3.56 million shares, the position amassing 1.50% of its total equity portfolio. Moreover, in his letter to Greenlight's investors for the first quarter of 2014, Mr. Einhorn explained why he likes Conn's.
