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Downtown Chews On Cosi

The hedge fund takes a 5% stake in the struggling sandwich chain.

Hedge fund Downtown Associates has amassed a 5.1% stake in sandwich maker




Ronald Juvonen, manager of the Kennett Square, Pa., hedge fund, revealed a 2.05-million-share stake in Deerfield, Ill.-based Cosi as of April 26, according to a filing with the

Securities and Exchange Commission


Juvonen was not available to comment and a spokesman at Cosi declined to comment on the Downtown Associates investment.

Performance at the premium sandwich chain, which first issued shares to the public about five years ago, has been headed south. The company is due to post first-quarter earnings Thursday, but last month Cosi guided expectations down, saying it expects to see losses equivalent to 11 cents a share.

Analysts consensus estimates surveyed by Thomson Financial had estimated a loss of 6 cents per share on revenue of $35.1 million.

Cosi has also lost its CEO Kevin Armstrong, who resigned for health reasons. The board named Robert Merritt, the former CFO at

Outback Steakhouse


, to serve as chief executive on an interim basis. Cosi's spokesman says a search is under way but notes that the process typically takes anywhere from six to nine months.

The company owns 113 stores and has 19 other franchise locations in the U.S., along with franchise agreements to expand by more than 300 stores in 20 locations.

Shares of Cosi, which came public at $7 apiece in November 2002 and traded as high as $10.13 last May, were off 6 cents Monday at $4.88.