Relational Investors has reported, in a recent filing with the Securities and Exchange Commission, a further reduction in its holding of PMC-Sierra Inc (NASDAQ:PMCS). Around 7.61 million shares were disposed of, leaving the fund with roughly 9.7 million shares or 4.9% of the company’s outstanding stock. Relational Investors’ management had chosen to sell some 5.5 million PMC-Sierra shares back in May, as part of the stock repurchase agreement signed by the company and the fund. Ralph Whitworth, the fund’s manager, has taken an indefinite leave in July 2014 and the fund management has decided to wind down their operations.
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A provider of semiconductor and software solutions, PMC-Sierra Inc (NASDAQ:PMCS) has never returned to its massive overvaluation before the 2001 tech bubble burst. Following a peak of $255.5 per share in March 2000, the stock experienced a savage crush, wiping most of its value and has been trading in a range between $4 and $21 per unit. So far this year the stock has fallen by 26%. The company has a market cap of $1.35 billion and trades at a trailing Price to Earnings (P/E) ratio of 340, a massive multiple compared to its industry peers, which are traded at an average P/E ratio of 23.10. In terms of revenue PMC-Sierra Inc (NASDAQ:PMCS) is not doing so well either: for the 13 weeks ending June 27, 2015 the company has reported revenues of $124 million, down 1.6% year-over-year and 6.2% lower than the previous quarter. Earnings have also plummeted and turned to a loss of $0.04. Wall Street expects the company to recover in the current quarter and predict revenues of $131 million and earnings per share of $0.12. The stock is mainly recommended as a ‘Hold’ and has a mean price target of $10.29. Among the hedge funds that we track, George Soros‘ Soros Fund Management and Ken Fisher‘s Fisher Asset Management stand out with investments of 2.82 million shares and 11.7 million shares respectively, according to their latest 13F filings.
Another holding that has been significantly reduced in recent weeks by Relational’s management is Magnum Hunter Resources Corp. (NYSE:MHR). Since the fund has issued its latest 13F filing, it has gradually reduced its sake on the Texas-based oil and gas company. Approximately a week ago the fund reported the disposal of 4.7 million Magnum Hunter Resources shares and now holds roughly 13 million shares, less than half the amount reported at the end of the first quarter.
Relational Investors has a well diversified portfolio with an estimated market value of $2.37 billion, as reported in its latest 13F filing. Two major sectors seem to have attracted most of the fund’s interest: consumer (36% of the portfolio) and industrial (31% of the portfolio). It had also invested a significant portion of his capital in healthcare stocks, which account for 18% of the portfolio. Oreo-maker Mondelez International Inc (NASDAQ:MDLZ) is Relational Investors’ top dog, with the fund holding approximately 12.5 million shares. Hologic, Inc. (NASDAQ:HOLX) and Bunge Ltd (NYSE:BG) are another two favorites, with Relational holding 12.9 million and 4.94 million shares respectively. No changes in these positions have been reported in the fund’s latest 13F filing.
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