13Ds are filed with the Securities and Exchange Commission within 10 days of an entity’s attaining a greater than 5% position in any class of a company’s securities. Subsequent changes in holdings or intentions must be reported in amended filings. This material has been extracted from filings released by the SEC from Dec. 19 through Dec. 25. Source: InsiderScore.com
Argo Group
International (ARGO)
Voce Capital disclosed on Dec. 23 that it held 1,990,676 shares of the property and casualty insurer, equal to a 5.8% interest in the firm. On Dec. 20, Voce submitted a requisition notice on behalf of shareholders holding more than 10% of Argo’s outstanding stock that requires Argo to hold a special meeting within 60 calendar days from the date of the notice. The meeting is to vote for the removal and replacement of five director’s of Argo’s board with an equal number of Voce nominees submitted to Argo through a separate letter.
Increases in Holdings
Tivity Health
(TVTY)
Hudson Executive Capital disclosed on Dec. 19 that it lifted its interest in the fitness and lifestyle firm of 2,728,655 shares, equal to 5.7% of the outstanding stock. Hudson Executive, having cited Tivity Health as “undervalued and an attractive investment,” bought 349,095 shares from Nov. 13 to Dec. 19 at prices of $17.69 to $20.31 apiece. Hudson has had “constructive” discussions with Tivity and expects to further engage the firm regarding a range of operational and strategic topics.
Marchex
(MCHX)
Edenbrook Capital disclosed an increased position in the mobile sales and marketing-analytics firm of 6,184,996 shares. The higher stake resulted in the purchase of 349,572 B shares from Oct. 24 through Dec. 18 at prices of $3.05 to $4.15 apiece, and gives Edenbrook a 16.1% interest in Marchex’s outstanding class B stock.
Decreases in Holdings
Alector (ALEC) OrbiMed Advisors cut its exposure to the neuro-based biotechnology company to 11,392,229 shares, or 16.5% of the tradable stock. Without providing a reason, OrbiMed executed a block trade sale of one million shares on Dec. 17 at $18.52 apiece, trimming its Alector stake by 8%.
BioDelivery Sciences International
(BDSI)
Broadfin Capital slashed its stake in the pharmaceutical with its sale of 6,000,000 shares on Nov. 15 to Dec. 20. Those sales were transacted at per share prices of $5.90 to $6.50 and more than halved Broadfin’s position to 6,732,911 shares, or a 6.8% interest in BioDelivery Sciences.
Bridge Bancorp (BDGE)
Basswood Capital Management reduced its stake in the New York–based bank to 2,308,886 shares, equal to about 11.6% of the outstanding shares. Basswood trimmed its position through the sale of 198,353 shares on Dec. 10 through Dec. 16 at a price range of $32.66 to $33.80 each.
Universal Technical Institute (UTI)
Coliseum Capital Management, without citing a reason, slashed its holding in the automotive technician-education firm to 1,266,701 shares. Coliseum cut nearly three-quarters of its position through a secondary offering that closed on Dec. 17, selling 3,601,724 shares at $6 apiece. Following the sale, Coliseum holds a 4.7% stake in Universal’s tradable stock.
Horizon Global (HZN)
Lapetus Capital lowered its holding of the automotive-components maker to 2,473,904 shares, or 9.7% of the tradable stock. The smaller position resulted from the sale of 267,872 shares on Nov. 14 to Dec. 19 at prices of $3.50 to $3.89 apiece.
The Activist Spotlight
Resideo Technologies
(REZI)
Business: provides security solutions in residential environments
Investor’s Average Cost: $18.61 per share
Stock Market Value: $1.5 billion ($11.8/share)
What’s Happening: Praesidium Investment Management supports the company’s recently announced changes, including the search for a new chief executive officer, and will monitor company actions to ensure that they are aimed at getting the business operationally and financially back on track.
Key Numbers:
43%: decline in Resideo’s stock since Praesidium started acquiring it
12%: increase in the S&P 500 index over the same time period
Behind the Scenes: Praesidium is an activist investor that prefers to work behind the scenes. Resideo’s stock is down significantly since Praesidium started buying it, and this is an accidental activist filing—when a value investment goes wrong and the investor is forced into activism as a last resort.
Praesidium believes that the company is significantly undervalued, despite having tremendous assets. Resideo’s Products & Solutions division has a strong competitive position in the pro-contractor channel network, and its ADI Global Distribution unit has a market-leading position and track record of solid execution.
Praesidium notes that the company has suffered from self-inflicted execution issues under the prior CEO that have temporarily affected the financial performance of the company’s business this year, but is encouraged by Resideo’s recent changes to the board and management. Praesidium is hopeful that the company can continue on its path to profitable growth under the leadership of an operationally and industrially focused CEO.
Praesidium is a softer activist that is unlikely to put any major pressure on the company or even try to gain board representation.
–Kenneth Squire
The 13D Activist Fund, a mutual fund run by an affiliate of the author and not connected to Barron’s, has no position in Resideo Technologies. In addition, the author publishes and sells 13D research reports, whose buyers may include representatives of participants in, and targets of, shareholder activism.
Email: [email protected]
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