New hopes for Esprit as hedge fund increase stake

Troubled Esprit Holdings, allegedly to have ‘lost its soul’, rose to a three-week high in trading in the city after hedge fund Lone Pine Capital LLC increased its stake to become the second-biggest shareholder. The largest Hong Kong-listed clothing

 retailer climbed 12 percent to HK$11 at the 4 p.m. close in Hong Kong trading, the stock’s highest level since Sept. 16. The peak in trading followed the news of that Lone Pine Capital bought 38.9 million shares at an average price of HK$9.50 each on Oct. 4, a disclosure filing to the Hong Kong stock exchange showed.

The purchase by the Greenwich, Connecticut-based hedge fund helped trim a decline by Esprit since the apparel company said Sept. 15 full-year profit fell 98 percent. Revenue from Europe, where Esprit makes most of its sales, declined for a third year amid the region’s debt crisis and intensified competition.

Lone Pine Capital’s stake in the retailer increased to 6.23 percent from 3.22 percent after the transaction, according to the filing. The fund’s holding trails that of State Street Corp. (STT), which owns 6.41 percent, Bloomberg data shows.

“The stake increase by the hedge fund is certainly a factor driving the share price,” Kenny Tang, an analyst at AMTD Financial Planning Ltd., said by phone today. “It may spur the idea that further purchases could be on the way.”

As per contextualize the rise of the once so-called Asian competitor for H&M or Zara, Asian stocks rose, sending a regional index toward its biggest four-day advance since March 2009, as Chinese lenders surged as a state-owned investment company bought bank shares and Japanese equities climbed after resuming trade from a holiday. First Shanghai Securities strategist Linus Yip Sheung-chi said the buying announced by the Hong Kong government had a short-lived effect as such support does not address structural issues. "Investors are worried about the European debt crisis and the non-performing loans in the Chinese banking system," he said.

Angela González-Rodríguez