FLWS

$FLWS Major Shareholder Continues $40M Contrarian Buying Spree Despite 50% Stock Plunge

06/03/2025 22:57

Fund 1 Investments LLC, a major shareholder of $FLWS (1-800-Flowers.Com Inc), has been aggressively accumulating shares despite a steep stock decline, drawing market attention to this contrarian investment strategy. While the stock has plummeted nearly 50% from $9.69 in June 2024 to $4.81 as of June 2025, Fund 1 Investments has actually intensified its buying activity throughout this downturn. 1-800-Flowers.Com operates as a leading specialty retailer providing online flower delivery and gift services across the United States. The company's business model is heavily seasonal, centered around major holidays like Valentine's Day and Mother's Day. However, the company has faced significant headwinds over recent quarters, with persistent revenue declines and mounting losses. For the quarter ended March 31, 2025, the company reported an adjusted loss of $2.80 per share, far exceeding analyst expectations of a 34-cent loss, while revenue declined 12.6% to $331.45 million. Despite these challenging fundamentals, Fund 1 Investments LLC has maintained a consistent buying campaign since January 2025. Notably, the fund's purchasing intensity has actually increased as the stock price declined. Starting with a four-day buying spree from January 10-15, where it acquired 368,000 shares worth $2.7 million, the fund has systematically increased its position as the stock fell from the $7 range to the $6, $5, and eventually $4 levels. The most aggressive purchase occurred on May 9, when the stock hit $4.86. Fund 1 Investments bought 350,863 shares at an average price of $4.42, investing $1.55 million in a single transaction. This represented the largest single-day purchase and demonstrated management's strong conviction near what appeared to be the stock's bottom. According to insider trading analysis, Fund 1 Investments has executed over 70 purchase transactions from January through early June 2025, investing more than $40 million total. These transactions were made on behalf of Pleasant Lake Onshore Feeder Fund and PLP Funds Master Fund, indicating a sustained equity accumulation strategy by these investment vehicles. There were some offsetting sales by company executives. President Jonathan Feldman sold 6,864 shares at $4.80 on May 28 for $32,947, while CIO Arnold Leap sold 3,000 shares at $7.37 in November. However, these sales were relatively minor compared to Fund 1's massive accumulation. Market experts have mixed views on this contrarian approach. While the persistent buying during the decline shows strong conviction in the company's intrinsic value, the ongoing operational struggles suggest potential for further near-term downside pressure. 1-800-Flowers initially benefited from pandemic-driven demand for contactless gift delivery, but has struggled during the normalization period. The company faces multiple headwinds including inflation-driven shipping cost increases, reduced consumer discretionary spending, and intensified competition in online retail. The May 2025 announcement of a CEO transition has added to concerns about management stability. Despite these challenges, analysts maintain a 'buy' rating with a 12-month price target of $10.50, suggesting significant upside potential from current levels. This optimism reflects expectations for seasonal business improvement in the second half and potential benefits from cost restructuring initiatives. Key factors to watch include upcoming quarterly earnings and new management's restructuring plans. The impact of Fund 1 Investments' growing stake on corporate governance and shareholder value initiatives will also be closely monitored. While near-term volatility seems likely, long-term investors focused on intrinsic value recovery may find the current situation compelling.

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