Pandora CEO Makes a Lucrative Bet as Third Point Backs Away

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The chief executive officer of Pandora A/S made a smart bet on Tuesday when he took advantage of a selloff to buy shares in his company. By the end of the trading day, the stock was up 3.5 percent.

The Danish jewelry maker initially sank after publishing fourth-quarter results that showed it was still struggling in the U.S. But management also pointed to an improvement in online sales and said it was investing more to help turn things around in its biggest market.

For CEO Anders Colding Friis, the sudden reversal in the stock’s fate couldn’t have been sweeter. According to a regulatory filing sent shortly after noon Danish time, he’d just bought 1,850 shares for a little over 1 million kroner, bringing his total holding to 20,695 shares, or more than 12 million kroner ($2 million).

Colding Friis’s two daughters also bought 470 shares, together, in their father’s company on Tuesday. Meanwhile, Third Point cut its short bet against Pandora to 400,000 shares, or about 0.36 percent of the share capital, according to a regulatory filing to the Danish Financial Supervisory Authority late on Tuesday. It had previously held 0.53 percent.

Short interest in Pandora is at about 10.1 percent, according to IHS Markit. That’s down from a November peak of 12.8 percent.

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With Pandora opening more than 8 percent lower on Tuesday, analysts first suggested the market was disappointed by the dividend proposal and by signs of a weak first quarter. When the shares started rising, an absence of “bad news” emerged as the main theme.

The Numbers

Revenue grew 16 percent in the Americas last quarter from a year earlier, the company said on Tuesday. In local currency, Pandora saw a 27 percent increase. Management had already reported some preliminary figures last month.

“The U.S. retail market has been challenged and that’s still the case, so we need to do as well as we can in those circumstances,” Colding Friis said. “We can become stronger in the U.S. through products but also through better eCommerce.”

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Pandora lost more than a quarter of its market value in 2017 as its U.S. business was pummeled by a weak retail environment. Hedge funds started spotting opportunities to make money shorting the stock, and Pandora became a target for speculators expecting it to continue declining.

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This year, the stock’s down 14 percent.

— With assistance by Hanna Hoikkala

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