Cove Street Capital Ups Stake in Signature Group Holdings, Inc (SGGH)

Jeffrey Bronchick’s Cove Street Capital increased its stake in Signature Group Holdings, Inc (OTCMKTS:SGGH) to approximately 707,200 shares from 500,200 held previously, as revealed in a recent filing with the SEC. Currently the fund’s position amasses 5.79% of the company’s common stock.

Signature

Signature Group Holdings, Inc (OTCMKTS:SGGH) is a business and financial services company with holdings in cash, financial assets, and controlling ownership interests in North American Breaker Co., Inc. (NABCO) and Cosmed, Inc., its two operating subsidiaries. In 2013, Signature Group Holdings generated operating revenues of $43.6 million, with respective net loss per share of $0.85, higher than net loss of $0.64 per share in 2012.

The overall improvement in results for 2013 can be attributed to a reduction of some of the company’s corporate expenses, traction in earnings in the industrial supply segment, one-off profits generated in Special Situations, and also to the resolution of the ongoing legacy litigation issues in discontinued operations,” the company said in a statement.

For the fourth quarter of 2013, the company recorded earnings of $0.04 per share, which compares to a net loss of $0.49 per share in the year ago period. Signature Group undertook cost cutting initiatives, which include the layoff of eight employees, and the redemption of the 9.0% Notes Payable. The newly founded Delaware holding company is to endow with a robust organizational structure for inorganic growth and strengthen the existing operations. The company will also relocate to a smaller headquarters space this month, Signature Group Holdings, Inc (OTCMKTS:SGGH)’s Chairman and CEO Craig Bouchard said in the press release. All these initiatives aided Signature Group in reporting a profitable quarter.

Cove Street Capital is a classic value investor. According to its website, Cove Street run concentrated portfolios and offers value-based investment strategies to its client-partners. Founder Jeffrey Bronchick is the Chief Investment Officer of Cove Street Capital. Previously, he has worked as the Chief Investment Officer and a lead principal of Reed Conner & Birdwell, LLC. In the 1990s, he was one of the first columnists for the TheStreet.com. He graduated from the University of Pennsylvania and attended the London School of Economics.

The $538.6 million equity portfolio of the fund is mainly invested in Financial and Basic Materials stocks. Cove Street has a considerable position, worth $28.4 million (5.26% of the portfolio) represented by 1.3 million shares in Forestar Group Inc (NYSE:FOR). Another major holding of the fund is Taminco Corp (NYSE:TAM), which contains 1.3 million shares worth $25.5 million. Moreover, Cove Street Capital holds approximately 34,900 shares worth $23.2 million in Graham Holdings Co (NYSE:GHC).

Disclosure:none

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