Bruce Berkowitz is not giving up on iconic retailer Sears. Berkowitz’s Fairholme Capital Management is the largest external shareholder at Sears Holdings Corp., and he is apparently still confident as he is doubling down on his bet on the firm.
Berkowitz has been a strong supporter of Edward Lampert, the hedge fund manager who operates Sears and controls close to half of the shares, for some time. But Fairholme’s December 18th filing with the SEC detailing his larger stake suggests that Berkowitz intends to have a greater say along with his increased stake in the retailer.
The SEC document highlights that representatives of Fairholme “will be in contact” with Sears management, board and other shareholders to discuss the firm’s long-term prospects. Of note, these discussions “may include proposing or considering” new steps involving Sears, as was first reported by Bloomberg News.
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As noted by ValueWalk, Fairholme treated its Sears stake as a passive investment in the ordinary course of business until the late fall of last year. However, in September of 2014 Fairholme started reporting its stake on the SEC form that active investors must use, and the firm reserved the right to communicate with management and the BoD, but did not indicate specific plans to do so until now.
Of interest, Fairholme snapped up additional shares of Sears on December 3rd, the same day that the chain announced a $454 million third-quarter loss and the stock fell almost 7%. SEC filings indicate Fairholme bought 418,500 shares at $18.90 each on December 3rd.
Moreover, the money manager has continued to snap up Sears shares almost every day in December, including 390,100 more SHLD shares added to his stake since December 24th. Fairholme funds in total have bought about 1.45 million shares in the 150-year-old department store this month, but also sold several tens of thousands of shares in other accounts.
Fairholme’s stake was up to 27.8 million shares, a 26% stake, as of the close of trading on Tuesday, December 29th.
Of note, SHLD is currently Fairholme’s largest stock holding, and represents more than 20% of the firm’s total equity investments.