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).
Follow Steven R. Becker And Matthew Drapkin's Becker Drapkin Management
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.
The second ranked holding of Becker Drapkin Management is represented by Comverse Inc (NASDAQ:CNSI), in which the fund disclosed ownership of 1.45 million shares valued at $28.5 million as of March 31. The stake remained unchanged over the course of the first quarter. Comverse Inc (NASDAQ:CNSI) is a $543.1 million market cap provider of cloud-based software solutions. On Monday, Comverse Inc (NASDAQ:CNSI) announced an agreement to acquire United Kingdom-based Acision, which provides secure mobile messaging and engagement services. The purchase price consists of about $135 million in cash, 3.13 million shares of Comverse’s common stock, and potential earnout payments of up to $35 million. The deal is expected to close by the end of the third quarter. In addition, Comverse Inc (NASDAQ:CNSI) is selling all of its BSS business assets to Amdocs Limited (NASDAQ:DOX) for $272 million in cash. Comverse Inc (NASDAQ:CNSI) President and CEO Philippe Tartavull believes that this sale will make Comverse “a profitable company, with an exceptionally strong balance sheet.” The transaction is likely to close by the end of September 2015. Comverse (NASDAQ: CNSI)’s stock increased by 32.28% during the past six months. Jeffrey Bronchick’s Cove Street Capital also sees value in Comverse (NASDAQ: CNSI), upping its stake during the first quarter by 22% to 700,095 shares.
Finally, we’ll talking about Fuel Systems Solutions Inc. (NASDAQ:FSYS), in which Becker Drapkin Management revealed holding 1.89 million shares, valued at $20.92 million. The stake was unchanged from the previous reporting period. Fuel Systems Solutions Inc. (NASDAQ:FSYS) is engaged in making alternative fuel components and systems for use in transportation and industrial applications, and has a market cap of $143.3 million. Shares of the California-based company declined by 27.64% during the past year. For its first quarter of 2015, Fuel Systems Solutions Inc. (NASDAQ:FSYS) posted a net loss of $11.9 million, versus a loss of $2.0 million in the same quarter a year ago. Revenue decreased to $63.3 million, compared to $81.3 million one year ago. Mariano Costamagna, the company’s Chief Executive Officer, has decided to retire from Fuel Systems Solutions Inc. (NASDAQ:FSYS) by the end of 2015. The company’s board of directors appointed a committee to search for a successor for Mr. Costamagna, who will continue to serve as the company’s director. Another large investor of the company is Chuck Royce’s Royce & Associates, holding 1.18 million shares as of March 31.
Disclosure: None
