Stitch Fix Stock Has Cratered. One Investor’s $100 Million Bet on a Comeback.

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Stitch Fix

stock has tumbled in 2021, but one of the largest investors in the online apparel retailer has been racking up big stock buys.

Stitch Fix (ticker: SFIX) stock dropped 68% in 2021, compared with double-digit gains at peers

Abercrombie & Fitch

(ANF),

Urban Outfitters

(URBN), and Lululemon Athletica (LULU). Stitch Fix is a component stock of the

SPDR S&P Retail

ETF (XRT), which sports a 42% gain for 2021.

Shares ran up in January as bets that Stitch Fix stock would drop went bad. Bears tried to unwind their negative bets all at once, causing short squeezes that pushed the stock higher. In March, the upside story unraveled when Stitch Fix reported disappointing results for the fiscal second quarter, and cut guidance. A month later, the company announced that founder Katrina Lake was stepping down as CEO effective Aug. 1 to become executive chairperson.

Shares have tumbled 65% so far under new CEO Elizabeth Spaulding, who was most recently Stitch Fix’s president. In 2021, the company began allowing customers to pick their own outfits a la carte without styling services and fees.

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Working Capital, which has offices in London and Singapore, disclosed in an Oct. 8 Securities and Exchange Commission form that its affiliates owned 9.1 million Stitch Fix shares, an 11.4% stake.

Working Capital disclosed in other SEC filings that it has been buying Stitch Fix stock from Sept. 9 through Dec. 28, paying $108.6 million for 3.68 million shares, an average price of $29.47 each. Working Capital has been buying as the share price has slipped; it was buying Stitch Fix stock in the $30s in September and October, but the average transaction prices of purchased shares in December at prices ranging from the teens to the low $20s.

Working Capital didn’t respond to a request for comment. The firm now owns 10.9 million Stitch Fix shares, making it the company’s second-largest shareholder behind founder Lake. But Working Capital’s voting power is in the low single digits. Through the ownership of supervoting stock, Lake’s voting power stood at 29.3% as of Nov. 3, and entities affiliated with Baseline Ventures and Benchmark Capital Partners held voting power of 19.3% and 10.8%, respectively, also through supervoting shares.

Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.

Write to Ed Lin at [email protected] and follow @BarronsEdLin.