Becker Drapkin Management, led by Matthew Drapkin and Steven R. Becker, has greatly reduced its activist stake in XO Group Inc (NYSE:XOXO), which has been occupying the top position in the fund’s public equity portfolio for last two quarters. A newly-amended filing with the U.S. Securities and Exchange Commission revealed that Becker Drapkin Management now holds 945,876 shares of XO Group Inc (NYSE:XOXO), representing a substantial decrease from the 2.16 million shares of the company it reported holding in its latest 13F filing for the reporting period of March 31. The current stake comprises 3.6% of the company’s outstanding common stock.
Insider Monkey tracks the latest moves of hedge funds as well as monitor their holdings to find actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points between 1999 and 2012, however this 50-stock portfolio also underperformed the market by seven basis points per month. On the other hand, the top 15 small-cap stocks had an average monthly return of 127 basis points per month during the three month holding period that begins two months after the end of each quarter. We have been sharing the stock picks of our small-cap hedge fund strategy since the end of August 2012 and our small-cap strategy has returned over 144% since then, beating the S&P 500 ETF (SPY) by over 84 percentage points over this 2.5+ year period (read the details here).
Becker Drapkin Management is a Texas-based hedge focusing on small-cap value situations in the U.S. equity markets. In its latest 13F filing, Becker Drapkin Management disclosed a public equity portfolio valued at $179.7 million. During the first quarter, the fund had a strong focus on technology stocks, which accounted for over 55% of the fund’s total portfolio value. The fund also likes to invest in services and consumer goods companies. In this article, we’ll take a closer look at the fund’s top holdings in terms of value, including aforementioned former top pick XO Group Inc (NYSE:XOXO), as well as Comverse Inc (NASDAQ:CNSI), and Fuel Systems Solutions, Inc. (NASDAQ:FSYS).
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On the top of list is XO Group Inc (NYSE:XOXO), a consumer Internet and media company, with a market cap of $418.6 million. The company reported solid financial results for the first quarter of 2015, with net income of $1.4 million, versus a loss of $676,000 in the same quarter last year. Revenue for the first quarter was $32.6 million, representing a slight increase compared to the $32.4 million it reported for 2014. XO Group Inc (NYSE:XOXO)’s stock performance has also been impressive, gaining 41.84% during the past year; or rather, had been impressive. Shares have slid by 9% in 2015. Other large shareholders of the company among funds and investors we track include Wallace Weitz’s Wallace R. Weitz & Co. and John W. Rogers’ Ariel Investments, holding 2.12 million shares and 1.47 million shares, respectively, as of March 31.
