BlackRock And D.E. Shaw Take Bigger Stakes In Bed Bath & Beyond

Private equity firms, led by BlackRock, now own more than 40% of Bed Bath & Beyond. (Photo by Noam … [+] Galai/Getty Images)

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Bed Bath & Beyond, which is in the early stages of its projected turnaround and has seen its stock rise more than 700% since early spring, has attracted the attention of two of the biggest private equity investors in the world: BlackRock and D.E. Shaw. With these actions, just four firms now own more than a third of the company.

In SEC filings over the past four days, BlackRock disclosed it has now taken an 18.5% ownership stake in the big box home furnishings retailer while D.E. Shaw has a 5.1% position in the company. It is unclear what if any position the two investment giants, which have taken positions in other retailers over the years, had in Bed Bath previously although it is believed BlackRock has been building up its share for some time.

Nor is it known what these investments represent: are they just buying BBB’s stock anticipating further rises in its value or do one or both firms have plans to take larger stakes, potentially even instituting a takeover. Neither company had responded to email inquiries as of Tuesday evening.

Bed Bath & Beyond declined to comment on the filing news.

The company has historically been a favorite of institutional investors and in fact a group of them came together in 2019 to force the retailer to make changes, resulting in the removal of the entire upper management and board of directors. They have all been replaced by a new slate of officers, led by CEO Mark Tritton, who have moved quickly to initiate a rebuilding plan that includes store closings, divestitures of smaller brands and significant investments in infrastructure and merchandising. The company showed its first profit in more than a year and its first positive same store sales results in nearly four years when it reported second quarter numbers this fall. It will release its third quarter results on Jan. 7, 2021.

The company laid out its plans for its transformation at its first-ever investor day in late October. From a low of under $4 in its share price in early April, the stock has gone as high as $26.16, closing Tuesday at $18.59.

Two other large investors also have significant stakes in the company. Vanguard Group disclosed in July it had accumulated a 10.1% position in BBB while Legion Partners — one of the three firms that led the shareholder push to change management — has about 5% under several different funds.

Together these equity firms control at least close to 40% of all outstanding shares in Bed Bath. Someone who is familiar with the company, but declined to be identified, said the BlackRock investment was a “vote of confidence” in the retailer’s future.