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[video] Activist Investor Buys 8% Stake in Aeropostale

NEW YORK ( TheStreet) -- Aeropostale (ARO - Get Report) shares were surging 17% after Hummingbird LLC disclosed in a regulatory filing that it purchased nearly an 8% stake in the teen retailer.

Hummingbird is indirectly owned by Sycamore Partners, a New York-based private-equity fund focused on consumer and retail investments,which owns Hot Topic and Talbots. Sycamore has approximately $1 billion in capital under management as of June 2013, according to its Web site.

According to a Securities and Exchange Commission13D filing on Tuesday, Hummingbird acquired 6.25 million shares, or 7.96%, of Aeropostale's common stock.
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The share acquisition, valued at about $53.9 million, is seen as "an attractive investment," and part of the investment activities on behalf of Sycamore Funds, the filings said.

Aeropostale shares were rising 16.5% to $10.04.

"The reporting persons may communicate with the issuer's management, members of the issuer's board of directors, other stockholders of the issuer and other relevant parties concerning the business, assets, capitalization, financial condition, operations, management, governance, strategy and future plans of the issuer," the filing said.

Stifel analyst Richard Jaffe said he believes that Hummingbird will attempt to take the company private at a price of about $10 a share.

"Given Sycamore Partners' track record, we believe Hummingbird will ultimately attempt to take Aeropostale private," Jaffe wrote in a research note. "In our opinion Stefan Kaluzny, co-founder of Sycamore Partners, is involved in the bid on ARO and his presence, in our opinion, adds credibility to the bid and in our estimation, the likelihood of its success."
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Aeropostale reported an adjusted loss of 34 cents a share for the second quarter. Analysts were expecting a loss of 24 cents a share. The retailer said net sales dropped 6% in the quarter to $454 million, while comparable-store sales plunged 15% compared to the same period a year earlier.

Aeropostale joins the likes of the teen retail segment, including Abercombie & Fitch (ANF) and American Eagle Outfitters (AEO), which reported dismal earnings and weak outlooks for the rest of the year as their target segment spends their dollars elsewhere.

-- Written by Laurie Kulikowski in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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