Offering a pleasantly stark contrast to an otherwise soft session on Wall Street, home furnishings retailer Williams-Sonoma (NYSE:WSM) is enjoying a strong performance today. Priced at over $155 as of this writing, WSM stock just inked a fresh 52-week high of $157.36. A nod from prominent investment firm Green Equity Investors IX has also helped invigorate sentiment for the stock.
According to Seeking Alpha, Green Equity recently boosted its passive stake in WSM to 5%. A passive stake refers to an investment made without the intention of influencing or taking control of a company’s leadership team or operations. Typically, the “passive” intent of a given investment is disclosed through a Schedule 13D filing with the U.S. Securities and Exchange Commission (SEC).
Regulatory filings reveal that Green Equity’s main fund, Investors IX LP, is the direct owner of 1.27 million shares of WSM stock. Meanwhile, auxiliary fund Investors Side IX LP is the direct owner of 1.94 million shares.
Notably, Green Equity is a leveraged buyout fund managed by Leonard Green & Partners. As Seeking Alpha notes, Leonard Green is a famous activist investor who has held stakes in retail enterprises like Rite Aid (NYSE:RAD), Petco (NASDAQ:WOOF) and Shake Shack (NYSE:SHAK).
Options Traders Buy Into WSM Stock
Since the start of the year, WSM stock has returned almost 37%. That is a remarkable achievement. Despite significant pressures to the consumer economy — most notably stubbornly high inflation — Williams-Sonoma continues to defy gravity. Even better, it’s attracting the smart money to the long side of the trade.
According to Fintel’s options flow screener — which focuses specifically on big block trades likely made by institutional investors — WSM has attracted significant bullish attention. Earlier today, a major trader sold (or wrote) 750 contracts of Sep 29, 2023 152.50 put options, collecting a $133,000 premium in the process.
Interestingly, the open interest of this put option sits at zero at the time of this writing, suggesting that these are freshly written puts. Prior to this transaction, on Sept. 13, a major entity also sold 1,025 contracts of the Nov. 17, 2023 130.00 put, collecting a premium of $495,000.
Of course, the options market involves complex and often overlapping transactions, so it’s difficult to make absolute statements about what’s going on here. Still, the data appears to suggest that institutional investors believe in the upward mobility of WSM stock.
Indeed, publicly traded retailers that rival Williams-Sonoma — like Home Depot (NYSE:HD) and Target (NYSE:TGT) — have conversely printed disappointing performances since the start of the year.
Why It Matters
While the derivatives market may be positive on WSM stock, the analyst community has raised some doubts. According to TipRanks, analysts peg Williams-Sonoma stock as a consensus hold. Meanwhile, the average price target for shares lands at $143, implying about 8% downside risk.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
