Mothers Work Inc. (NASDAQ: MWRK) apparently is attracting investors looking for a bargain.
Stadium Capital Management L.L.C., an Oregon-based hedge fund, yesterday reported that it had acquired a 7.6% interest in the Philadelphia maker of maternity clothing, according to a filing with the Securities & Exchange Commission. Stadium declined to comment on the investment.
Stadium isn't alone. FMR Corp., parent of Fidelity Investments, added to its position in May. Another big investor, Bear Stearns Asset Management, though reduced its stake in the company.
To be sure, Mothers Work is a cheap stock. Its shares have plunged more than 50 percent since the start of the year. Earlier this month, Mothers Work said sales declined more than 10 percent decline in July amid what President and Chief Creative Officer Rebecca Matthias described as a " continued difficult overall economic and retail environment."
Investors who buy these types of stocks pride themselves in finding value in stocks that other investors have given up on.
Maybe they think that the husband and wife management team of Dan and Rebecca Matthias, who have sold more than 231,000 shares earlier this year, will be able to improve their company's performance. Perhaps they figure Mothers Work will make an attractive buyout for either a leveraged buyout company or a larger apparel makers.
Whether their patience will be rewarded probably won't be clear for a few months.
Think of it as a pregnant pause.
- Jonathan Berr
