Fidelity Buys More Shares in House of Fabrics
Fidelity International Ltd. raised its stake in House of Fabrics, a Sherman Oaks-based chain of fabric and craft stores, to 8.8% from 7.3%.
Fidelity International, a Bermuda money-management firm that caters to foreign investors, formerly was part of FMR Corp., the Boston parent of the giant Fidelity group of mutual funds that operates in the United States. Fidelity International was spun off from FMR in 1980.
Both firms have been gradually amassing ownership stakes in House of Fabrics during the past 2 years and have said their purchases are for investment only and are not an overture to a takeover bid.
The FMR group separately owns 594,400 shares, or 9.1%, of House of Fabrics’ 6.54 million total common shares outstanding. Combined with Fidelity International’s 579,900 shares, the two groups now own about 1.2 million shares, or 18% of House of Fabrics.
Nation’s Largest
House of Fabrics, which operates more than 660 stores as the nation’s largest chain of fabric and home-sewing outlets, has increased its sales every year since going public in 1965 and had $323 million in sales for the fiscal year that ended Jan. 31. The company has never reported a loss. Yet against that record its stock, which closed Monday at $16.375 on the New York Stock Exchange, is considered inexpensive by some, including Fidelity International. “The reason for the purchase is that basically we believe the stock is undervalued,” said Dorsey R. Gardner, president of Kelso Management Co. in Boston, an adviser to Fidelity International.
In a filing with the U.S. Securities and Exchange Commission last week, Fidelity International said it bought an additional 105,200 shares of House of Fabrics between Oct. 6 and Nov. 11 at prices ranging from $16.57 to $17.32 a share. During the past year, the stock has traded on the market at $11.75 to $20 a share.
Gary L. Larkins, House of Fabrics’ president and chief executive, said his company continues to view the FMR and Fidelity International groups as passive investors. Larkins said he has talked with FMR officials in recent weeks “but they’ve not indicated to me that their purchases are other than just for investment.”
House of Fabrics was started in 1946 by David Sofro. His son, Barney Sofro, is chairman, and the Sofro family owns about 10% of the company’s stock.
