Market Overview

Great Hill Equity Still Likes Wayfair Stock, No Matter What Citron Says


In an amended Schedule 13G filed with the SEC on Tuesday, Great Hill Equity Partners disclosed ownership of 7,158,647 shares of Wayfair Inc (NYSE: W)’s Class A Common Stock. However, the fund had already declared holding the same amount of shares almost a year earlier.

Why The New Filing?

Well, in the 13G filed on February 12, 2015, the private equity firm said its 7,158,647 shares accounted for 19.3 percent of the company’s total outstanding stock. The new filing (dated February 9, 2016), stated instead that the same amount of shares accounted for 15.6 percent of the total shares outstanding.

What Happened?

Over the past year, Wayfair increased the number of shares of Class A Common Stock outstanding by 23.8 percent, from 37,002,874 shares to 45,814,237. Consequently, Great Hill’s stake, which comprised the same amount of shares it did a year ago, got diluted.

Despite this drop, the firm continues to be the largest institutional investor of record in the e-commerce company, trailed by FMR LLC, which declared owning 6,491,020 shares of the company as of September 30, and JP Morgan Chase & Co., which said it held 4,036,134 shares of Class A Common Stock by February 1.

Why So Bearish?

While Great Hill, FMR and JP Morgan seem quite bullish on Wayfair, the case for Citron Research is the complete opposite. Last Friday, the research firm said in a tweet that the company has "the worst [business] model on the internet" and "no one would care" if it were to simply "go away."

Related Link: Citron Research Hates Wayfair; Shares Lose 10%

Citron issued a $5.00 price target, which implies an 84 percent downside from current prices.

But Citron’s bearishness on Wayfair is not new. Back in August of 2015, the firm had assured that Wayfair’s was "the most mispriced stock" it had seen in years.

"Wayfair makes Citron feel like apologizing to every company we have written about in the past 5 years," the August report read. "Compared to Wayfair… you all have viable business models. Any analyst who defends this stock is clueless about furniture retailing and even more clueless about e-commerce.”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Posted-In: Long Ideas News Short Sellers Hedge Funds Insider Trades SEC Movers Tech


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