Fairholme Cuts Stake in Sears Holdings Corp (SHLD), Ubben Sells Even More Shares of Motorola Solutions Inc. (MSI), Plus Two Other Moves

Chief Investment Officer of Cambria Investment Management, Mebane Faber, wrote a book titled “Invest With the House: Hacking the Top Hedge Funds”, revealing a successful approach of how to generate good trading profits that involves mimicking hedge funds’ moves without paying their exorbitant fees. According to Mr. Faber, investors should try to avoid investing in hedge funds’ number one stock picks and focus on constructing an equally-weighted portfolio comprised of the top five holdings of favored investment firms, based on their quarterly 13F filings (excluding the largest equity position of those firms). Mebane Faber back-tested a strategy to the early 2000’s by focusing on his 20 favorite hedge funds and found that the strategy outperformed the S&P 500 gauge by six percentage points annually through the end of 2015. Likewise, our own backtests that covered the period between 1999 and 2012 showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here). These strategies suggest that tracking or examining the moves undertaken by top money managers in the hedge fund industry can pay off handsomely for retail investors. For that reason, this article will digest four SEC filings submitted by renowned investment firms monitored by Insider Monkey.

According to a freshly-amended 13D filing, Bruce Berkowitz’s Fairholme Capital Management LLC currently owns 26.71 million shares of Sears Holdings Corp (NASDAQ:SHLD), which account for 25.0% of the company’s outstanding common stock. This is down from the stake of 28.10 million shares reported in the mutual fund’s previous 13D on the company, which was filed with the SEC in late February. According to the aforementioned filings, Mr. Berkowitz accepted an invitation from the integrated retailer to join its Board of Directors effective February 24. Sears Holdings Corp (NASDAQ:SHLD) operates a national network of stores that comprises 1,672 full-line and specialty retail stores under the Kmart and Sears brand names. The struggling retailer has seen its annual revenue figures decline on a yearly basis since 2007. The company generated merchandise sales and services of $25.15 billion during 2015, down from $31.20 billion in 2014 and $36.19 billion in 2013. Shares of Sears are down by 64% over the past 12 months and it is not entirely clear how much more shareholder value could be destroyed by the sinking retailer in the years ahead. There were 2o hedge funds in our system with stakes in Sears Holdings at the end of 2015, compared with 22 registered at the end of the third quarter. Those 20 funds accumulated roughly 67% of the company’s outstanding shares. ESL Investments, managed by Edward Lampert, who now also manages Sears, owns 22.34 million shares of Sears Holdings Corp (NASDAQ:SHLD) as of December 31.

In a newly-amended Form 4 filing, Jeffrey Ubben’s ValueAct Capital reported selling 304,000 shares of Motorola Solutions Inc. (NYSE:MSI) on Monday at $72.82 apiece, trimming its holding to 8.21 million shares. The freshly-cut stake accounts for 4.71% of the company’s outstanding shares. The friendly activist hedge fund has been gradually unloading its stake in Motorola Solutions, as revealed in numerous Form 4 and 13D filings discussed by Insider Monkey recently; the fund had 17.59 million shares in its portfolio at the end of 2015. On March 10, ValueAct Capital entered into a pre-arranged 10b-5 Plan, under which the fund was set to sell up to 2 million shares through May 2016. However, given that Mr. Ubben’s investment firm owned 10.21 million shares of Motorola Solutions on March 10, the sales plan is currently completed (ValueAct sold exactly 2.00 million shares from March 11 through March 21).

The provider of mission-critical communication infrastructure, devices, software and services to government, public safety and commercial customers has seen its shares advance by 12% in the past 52 weeks. Motorola Solutions Inc. (NYSE:MSI)’s net sales for 2015 totaled $5.7 billion, a decrease from $5.9 billion generated in 2014. The decrease was mainly attributable to foreign currency headwinds in Europe and Africa, Asia Pacific, and Latin America, which was partly offset by growth in North America. It is important to note that the company plans to reduce its organic SG&A and R&D expenses by $150 million in 2016, which may drive up bottom-line results in the quarters ahead. The smart money sentiment towards Motorola Solutions declined in the December quarter, with the number of funds invested in the company shrinking to 22 from 27 quarter-over-quarter. William B. Gray’s Orbis Investment Management reported owning 13.05 million shares of Motorola Solutions Inc. (NYSE:MSI) through the latest round of quarterly 13F filings.

The next page of this article discusses two other SEC filings submitted by firms tracked by Insider Monkey.

As revealed by a Schedule 13G filing, Charles Clough’s Clough Capital Partners L.P. currently owns 2.04 million shares of CARDIOME PHARMA CORP (NASDAQ:CRME), which constitute 10.4% of the company’s outstanding shares. This is up from the position of 1.74 million shares disclosed in the fund’s 13F for the December quarter. Cardiome Pharma is a specialty pharmaceutical company that focuses on the development and commercialization of cardiovascular therapies. The company primarily relies on two in-hospital cardiology products, called BRINAVESS and AGGRASTAT, which are being commercialized in markets outside the United States. CARDIOME PHARMA CORP (NASDAQ:CRME)’s revenue for 2015 was $20.9 million, down from $30.0 million reported for 2014. The decrease was mainly driven by foreign currency headwinds, the delay of a distributor’s 2015 order, and the decrease of AGGRASTAT sales due to generic competition. The company anticipates revenue from the sale of AGGRASTAT to grow moderately throughout 2016, while its recent product additions of EXEMBOL and ESMOCARD are expected to positively impact the company’s top-line results. Cardiome Pharma is also preparing for the possible launches of BRINAVESS and AGGRASTAT in Canada in early 2017. A total of seven funds in our database were invested in the pharmaceutical company at the end of December, accumulating 21.40% of the company’s shares. Those investors are no doubt disappointed by the company’s stock performance this year, as shares have lost 47% since the beginning of 2016. Zach Schreiber’s Point State Capital owned a stake of 600,000 shares in CARDIOME PHARMA CORP (NASDAQ:CRME) on December 31.

A Form 4 filing reveals that Coliseum Capital Management LLC, founded by Christopher Shackelton and Adam Gray, has sold 175,522 shares of Providence Service Corporation (NASDAQ:PRSC) since Friday, at prices that ranged from $50.50 to $52.90 per share. After the recent sales, Coliseum Capital holds a stake of 1.97 million shares, which represent 13.24% of the company’s outstanding shares. Providence Services Corporation is a holding company whose subsidiaries primarily focus on providing healthcare and workforce development services. The company’s net service revenue for 2015 reached $1.70 billion, which was up from $1.14 billion reported for 2014. The 49.2% increase in the company’s top-line figure was partly attributable to several acquisitions completed in 2014. Providence Service Corporation (NASDAQ:PRSC)’s shares are down by 3% in the past 52 weeks despite having surged by nearly 7% since the beginning of 2016. The smart money sentiment towards the company declined significantly in the October-to-December period, as the number of funds with long positions in Providence Service plummeted to 7 from 16 quarter-over-quarter. Jim Simons’ Renaissance Technologies upped its stake in Providence Service Corporation (NASDAQ:PRSC) by 5% in the December quarter, ending 2015 with 921,900 shares.

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