Hedge Fund Pushes Online Crafts Retailer Etsy to Explore Sale

Hedge fund Black-and-White Capital LP on Tuesday called on Etsy Inc, an online retailer of handmade goods, to explore a sale, saying the U.S. company's sales growth had slowed while costs had increased.

Shares of New York City-based Etsy rose 2.4 percent to $11.32 in morning trading.

Black-and-White owns about 2 percent of Etsy, the activist hedge fund said.

Etsy's intrinsic value could reach $30 per share with operational improvements, and the company could be valued at $15.50 per share if sold immediately, Black-and-White said.

The hedge fund also said Etsy should separate the roles of chairman and chief executive, which are currently held by Chad Dickerson.

Black-and-White said growth in Etsy's gross merchandise sales — the dollar value of items sold in its online markets — had slowed due to flaws in its search algorithm.

Etsy's shares have fallen more than 30 percent since their initial public offering two years ago.

Etsy did not immediately respond to a request for comment. (Reporting by Rishika Sadam in Bengaluru; Editing by Sai Sachin Ravikumar)