AmeriCredit Investor Could Lighten Stake
Updated to include latest share price.
Berkowitz is the co-founder and chief investment officer of Fairholme Capital Management, one of the subprime auto finance company's largest institutional investors. He also serves as portfolio manager of the firm's main investment vehicle, the Fairholme Fund (FAIRX), which held a 24.2% stake in AmeriCredit as of Sept. 30.
Berkowitz's resignation, which AmeriCredit announced on Monday, could mean that Fairholme is getting ready to sell some of its holdings in the company."It's hard to tell what the exact motivation here is, but I don't think it can be interpreted as a positive," says Sameer Gokhale, an analyst at Keefe Bruyette & Woods, referring to Berkowitz's decision to step down from the board "To the extent that you have a large shareholder with a seat on the board who is now stepping down suggests that as a possibility that Fairholme may be seeking to reduce its stake in AmeriCredit." AmeriCredit said Robert Sturges, the president and CEO of Nevada Gold & Casinos (UWN), would be replace Berkowitz. Sturges is Fairholme's designee to AmeriCredit's board. Fairholme Capital is AmeriCredit's second largest institutional investor behind Leucadia National (LUK). Fairholme increased its stake in AmeriCredit back in December of last year through a debt-for-equity swap as the company was struggling for funding given the frozen credit markets. In the deal, AmeriCredit issued approximately 15.1 million shares of common stock to Fairholme, valued at $6.02 a share, in exchange for $108 million of par value 8.50% Senior Notes due in 2015. As part of the agreement, Fairholme and its affiliates agreed to limit its ownership of the lender's common stock to 28.9%. Prior to the exchange, Fairholme owned about 19.8% of AmeriCredit's outstanding shares.
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