BJ´s Wholesale Club (BJ) has returned to the market and was welcomed by investors. Shares were priced at the high end of the preliminary offering range and immediately jumped 25% higher in a move which is great for first day investors.
While I saw value at the offer price, the jump in the share price seen on the first day makes that I am much less attracted to the valuation, as I am not chasing this momentum run higher.
The Business
Most people are very much aware of BJ, especially if they live in the East. With 215 clubs in Eastern states the company is a major competitor of Costco and Walmart´s Sam´s Club in those states. Investors with a long term horizon may have already invested in the company before. Back in 2011, Leonard Green and CVC acquired the firm in a $2.8 billion deal, after which the company has been privately held ever since.
