Bruce Berkowitz, head of Fairholme Capital Management, has cut his personal exposure to Sears Holdings by selling a little more than half a million dollars in stock.
Berkowitz disclosed in filings with the Securities and Exchange Commission that he sold 444,800 shares of the struggling department store between Aug. 21 and Aug. 27 for a total of $517,100, or an average of $1.16 each.
The longtime Sears (SHLD) investor now owns 647,516 shares directly and another 1.25 million shares indirectly. Berkowitz also holds warrants that represent a total of 1.97 million additional Sears shares, if exercised, and don't expire until December 2019. They carry an exercise price of $25.69 a share -- nearly 20 times the stock's Tuesday closing price of $1.30.
Berkowitz and Sears didn't respond to phone calls seeking comment.
Fairholme, which oversees the flagship Fairholme Fund and two others, and Berkowitz are the second-largest investors in Sears, behind Chairman and CEO Edward Lampert and his investing entities. Before Berkowitz's latest sales, he and Fairholme controlled a 22.7% stake through holdings of 26 million shares, assuming warrants were exercised for 6.4 million shares, according to a March proxy statement filed by Sears.
Berkowitz had cut Fairholme's Sears investment a number of months ago, selling 3 million in shares from November to January, Barron's has reported. During that span, his average selling prices slipped from $4.58 to $3.34, and continue to drop. Sears has collapsed 64% so far this year.
Sears lost the retailing crown to Walmart (WMT) in 1990, and closing stores, declining sales and fewer shoppers have allowed the "Amazon of the 20th Century" to be eclipsed by the current Amazon (AMZN).
After years of investing in Sears, betting on a turnaround, Berkowitz had joined the comipany's board in February 2016. He was reelected the next year -- garnering more "for" votes than Lampert -- but then left abruptly in October before the end of his term. No specific reason was given for his departure.
Three months later, in Fairholme's annual report, Berkowitz lamented that, "Although markets reached new highs in 2017, there was not much to celebrate as the securities of Sears Holdings Corporation and Sears Canada wrecked the Funds' performance." He added that the retailer's inability to stop losing money "has been hugely frustrating and fatiguing for me to watch."
He recently struck a more upbeat note on the company. In his July semi-annual report to investors, Berkowitz wrote, "Sears securities are priced for doom, but we continue to expect additional asset sales and continued cost-cutting will fuel outperformance in our remaining Sears investments."
