Of course, JB Hi-Fi has been affected substantially by the coronavirus-induced economic shutdown. Its shares have fallen from almost $46 in February to a low of $23.50 that it hit last week. Since that point, the company’s shares have risen around 30%, including today’s moves.
Why did the JB Hi-Fi share price spike today?
There was no official news out of JB Hi-Fi today that might have sparked a move like this. In fact, the company advised the market last week that its New Zealand stores (worth around 3% of the company’s total sales) would be closing for a “minimum period of four weeks” – hardly good news.
What we did learn today, however, is that a large Japanese fund manager has been heavily buying JB Hi-Fi shares over the past week.
As JB Hi-Fi reported to the ASX, Mitsubishi UFJ Financial Group, Inc. has acquired 6.83 million shares between March 26 and March 30, 2020. This stake gives Mitsubishi UFJ Financial 5.95% voting power within the company and has a value of $211.68 million based on today’s closing share price.
JB Hi-Fi’s current market capitalisation is $3.56 billion.
So in my opinion, investors are responding to such a cash-heavy vote of confidence by Mitsubishi UFJ by rushing in afterwards – which explains why the JB share price rose 11% today.
Are JB Hi-Fi shares a buy?
I certainly like JB as a company – it has managed to dramatically defy the ‘retail apocalypse’ in recent years and has a large and loyal customer base as well as a huge range of diverse products available for its customers. This includes everything from refrigerators and TVs to vinyl records and games.
I especially admire how JB saw the writing on the wall for physical retail years ago and beefed up its product range and customer service offerings in response. This has done wonders in protecting market share in the face of fierce online competition from the likes of Amazon and eBay.
Still, I don’t think today’s share price is an absolute bargain. The company was trading below the current share price for most of 2019 and the whole of 2018 and earlier. I might have been interested at $23.50, but at ~$30, it’s well and truly in the ‘watchlist’ zone for me.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.