Forrester Research, Inc. (FORR): P2 Capital Partners Keeps Trimming Its Stake

Claus Moller‘s P2 Capital Partners has trimmed its activist stake in Forrester Research, Inc. (NASDAQ:FORR), a new filing with the Securities and Exchange Commission showed. P2 Capital disclosed ownership of around 932,000 shares of the company, down from some 1.18 million shares revealed in its latest 13F filing. Following the reduction, the investor’s position amasses 5.1% of Forrester Research’s common stock.

Forrester Research

P2 Capital Partners was founded by a Harvard MBA graduate and former employee of Richard Blum’s Blum Capital Partners. The fund focuses on small cap stocks and employes a private equity-like approach in picking its investments. At the end of September, the investor disclosed an equity portfolio valued at $711 million. With a total of 13 equity positions, the fund’s equity portfolio is concentrated in Technology, Services and Consumer Goods sectors. As of the end of September, the largest position in P2’s equity portfolio was represented by $1.25 billion air freight company UTi Worldwide Inc. (NASDAQ:UTIW), of which it held 11.27 million shares, the stake amassing around 16% of its equity portfolio. The fund has been a long-term shareholder of the company, holding shares since the last quarter of 2008. Meanwhile, since the end of 2008, the stock of UTi Worldwide lost around 13%, while the investor raised its stake from some 2.04 million shares held initially. The fund is also betting big on Blount International Inc (NYSE:BLT), of which it owns 7.37 million shares and it has been holding the company in its equity portfolio for over three years.

Forrester Research, Inc. (NASDAQ:FORR) is another long-term position in the fund’s equity portfolio, with P2 first disclosing ownership of around 554,200 shares in its 13F filing for the fourth quarter of 2009. The stock gained around 48% since the end of 2009, and as Mr. Moller built a substantial position, it has been mostly reducing his fund’s exposure to the stock throughout the last couple of years. Previously, the fund reported in July that it cut its stake to 1.19 million shares from 1.44 million shares.

The company falls under P2’s small-cap strategy, boasting a market cap of $684.70 million and it trails a P/E of 77.00, which is significantly above the industry average of 43.50. Moreover, Forrester Research, Inc. (NASDAQ:FORR)’s stock lost around 4% during the last 52-weeks, significantly underperforming the majority of its peers from the business services industry, which had an average return of 17% over the last year.

The stock lost ground despite reporting solid year-on-year growth in financial results with revenue for the third quarter of 2014 growing to $75 million, from $70 million a year ago. Moreover, Forrester Research, Inc. (NASDAQ:FORR)’s earnings per share went up to $0.16 at the end of September, from $0.12 a year earlier. However, overall, for the last year, analysts expect Forrester Research to post EPS of $0.92, which is slightly below $0.93 the company reported for the full 2013. The consensus revenue estimate stands at $312 million, which is above the previous year result of $298 million.

Aside from P2 Capital, in the equity portfolio of which Forrester Research, Inc. (NASDAQ:FORR) represented around 6% of the total value at the end of September, other funds among those we track haven’t showed a lot of interest in the company. Overall, in the previous round of 13F filings, Forrester was included in the equity portfolios of only nine funds from our database. Relatively substantial stakes are held by Chuck Royce’s Royce & Associates and Jim Simons’ Renaissance Technologies, which disclosed holding approximately 400,000 shares and 247,600 shares respectively in their latest 13F filings.

Disclosure: none