A full month after announcing that he will leave the board of directors for Sears Holding Corp. (SHLD) , major shareholder Bruce Berkowitz is further distancing himself from the declining retailer. This time, he's doing so with his wallet.
The investor behind mutual fund Fairholme Capital Management LLC is dumping $1.78 million worth of shares, or 462,000 total, of the company, according to a Nov. 14 SEC filing. Berkowitz now owns a 22.57% stake in Sears, down from 27% in October. Fairholme is still Sears' largest holder behind CEO Eddie Lampert, who controls 30% of the company.
The Sears board announced Berkowitz' departure on Oct. 16. He also owns debt and equity in multiple Sears entities, as well as shares in Seritage Growth Properties, Sears' real estate investment trust, according to the Wall Street Journal. Berkowitz distributed 28 million shares to the Fairholme Partnership hedge fund last month, but only a small percentage of these shares will be liquidated.
Berkowitz began building his stake in Sears in 2005 and joined the board in February 2016.
"It has been a pleasure to serve on the board of Sears Holdings and work closely with [CEO Eddie Lampert] and the rest of the leadership team. I wish the company and its associates all the best as Sears Holdings continues to execute on its strategic priorities," he said in a statement announcing his resignation.
Berkowitz's decision was not the result of any disagreement with Sears on its policies or operations, according to Sears spokesman Howard Riefs.
"Mr. Lampert and Mr. Berkowitz have a long-standing partnership and continue to have great respect for each other. They both expressed their appreciation for the time they spent together serving on Sears' board of directors," he told TheStreet in an email last month.
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Berkowitz gained prominence as a fund manager in the 1990s by betting on underdog companies, like Bank of America Corp., in which he invested after the financial crisis and only recently paid off. In 2010, he was named by Morningstar as the country's top stock fund manager of the decade. Since then, Fairholme's fortunes have waned: it has lost nearly 90% of its assets. It currently owns a 24% stake in St. Joe Company, a real estate development firm, as well as an 18% stake in the Federal National Mortgage Association, according to FactSet.
Berkowitz' has been raising his stake in Sears for more than 10 years as its shares fall. His incentive? The undervalued mall real estate, he said in an interview cited by WSJ.
"The deaths of today's malls and other enclosed spaces is greatly exaggerated," he said, adding that he believes restaurants, movie theaters and auto showrooms will occupy much of the space vacated by retailers.
His departure from the board was effective Oct. 31. Sears' stock value has fallen by more than 68% since the start of 2017, to $4.57 as of Thursday evening.
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