Hedge Funds Bought Brinker, Navistar, and More

Christopher Shackelton and Adam Gray’s Coliseum Capital Management (see Coliseum’s stock picks) has bought an additional 110,000 shares in The Providence Service Corporation (NASDAQ:PRSC) at prices roughly between $14.30 and $14.90. This gives the value and activist hedge fund over 2.3 million shares of the company’s stock. Providence Service is a $200 million market cap company providing specialized counseling, social services, and transportation for both healthcare providers and schoolchildren. Earnings were down 41% last quarter from a year ago despite rising revenue, and the stock trades at 24 times trailing earnings. Wall Street analysts expect the company to recover in 2013, and the forward P/E is only 13. It might be worth considering if Providence Service can reverse the trend in earnings.

A 13G filed with the SEC has disclosed that Philip Hempleman’s Ardsley Partners owns 1.6 million shares of learning and collaboration software company Saba Software, Inc. (NASDAQ:SABA). Our database of 13F filings shows that Ardsley, which now owns over 5% of the shares outstanding, had 900,000 shares in its portfolio at the end of the third quarter (see more of Ardsley’s stock picks). Saba has a market capitalization of about $240 million (and over $1 million in average daily dollar volume). The company announced in November that it will need to restate historical financial statements, though its most recent report suggested that operational figures such as cloud billings and customer signings are up. We wouldn’t make any moves on the company without more information.

Steelhead Partners reported owning just under 20 million shares of Gold Reserve Inc. (NYSE:GRZ), a $180 million market cap mining company (an average of 180,000 shares are traded daily, at a price close to $3). Steelhead had owned close to 12 million shares at the beginning of October (find more stocks the fund owned) and its most recent purchase gives it 27% of the shares outstanding. As an exploration stage company, Gold Reserve is unprofitable on a trailing basis and is not expected to have positive earnings next year either. It is up 5% year to date, but up 71% in the last two years. We don’t think that we would buy this stock either.