market folly

Ricky Sandler's hedge fund firm Eminence Capital recently filed an activist 13D with the SEC regarding shares of Men's Wearhouse (MW).  Per the filing, Eminence has disclosed a 9.8% ownership stake in the company with 4,684,200 shares, making them the largest shareholder.

The filing shows Eminence was buying MW shares in early October around $34 and then later in the month between $42 and $44.

Men's Wearhouse has recently been approached by fellow retailer Jos A. Bank (JOSB) about buying the company.  MW rebuffed the offer and now Sandler has sent a letter to MW's board asking them to reconsider.

While Sandler agrees that JOSB's $48 offer for MW undervalues the company, he argues that there are large synergies to be had in a merger.

In his letter, Sandler asks for the company to, "1) instruct your financial advisors to evaluate MW's strategic alternatives, including soliciting competing proposals to acquire MW and analyzing a leveraged recapitalization of MW in the public marketplace, and 2) enter into a dialogue with JOSB regarding a possible combination.  We intend to exercise our rights as shareholders to hold you accountable if you fail to take these actions by close of business on November 11th."

For more on this hedge fund, we've covered Eminence Capital's portfolio activity here.