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Hologic Inc. (HOLX): Activist Icahn Trims Position; Engaged Capital Intensifies Proxy Fight with Benchmark Electronics Inc. (BHE) & Other Smart Money Moves

After experiencing several years of expansionary monetary policy pursued by the Federal Reserve to stimulate the U.S. economy, we are currently facing a period of rising rates and monetary tightening. Although the path of rate-increases is quite unclear at the moment, there is good reason to believe that the U.S. economy and equity markets are entering a period of so-called normalization. It is widely-known that hedge funds employ various investment strategies that generally involve different risks for both money managers and those monitoring hedge fund moves. It is believed that event-driven and long/short equity strategies are the most promising strategies in a low-growth, rising-rate environment, so retail investors monitoring the hedge fund industry should be able to recognize what type of strategy each fund employs before blindly mimicking any moves. Having this in mind, this article discusses four SEC filings submitted with the SEC by renowned investment firm tracked by Insider Monkey.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

According to a new Schedule 13D, Jeffrey Bronchick’s Cove Street Capital LLC currently owns 5.32 million shares of EVINE Live Inc. (NASDAQ:EVLV), which make up 9.3% of the company’s outstanding stock. This compares with the stake 5.37 million shares disclosed in the fund’s previous filing on the company (a 13G filing), which was filed with the SEC in February. Although Cove Street Capital did not change significantly its ownership stake in EVINE Live, the fund did shift to an activist position. The filing added that Mr. Bronchick’s investment firm purchased EVINE’s shares with the belief that they were undervalued and represented an attractive investment opportunity at the time of acquisition. The filing also revealed that Cove Street Capital has had discussions with the digital commerce company regarding operational improvements and strategic direction, making suggestions in connection to the composition of the company’s Board of Directors.

EVINE Live Inc. (NASDAQ:EVLV) operates a television shopping network, called EVINE Live, through which the company markets a wide range of brand name and proprietary products such as jewelry and watches, home and consumer electronics, and other products.  The company generated net sales of $693.3 million during fiscal 2015, ended January 30, up from $674.6 million reported for fiscal 2014. Nonetheless, EVINE Live’s bottom-line results have disappointed investors in recent quarters. The company’s net loss for fiscal 2015 widened to $12.28 million from $1.38 million in fiscal 2014. In a fourth-quarter letter to investors, Cove Street Capital wrote the following: “Given its future earnings power and the value of its Boston TV station (a hidden but potentially meaningful asset), we expect EVLV to be a much better performer in the future.” Shares of EVINE Live have declined by 84% in the past 12 months. The hedge fund sentiment towards the digital commerce company declined in the final quarter of 2015, with the number of funds invested in the company shrinking to 11 from 16 quarter-on-quarter. J. Carlo Cannell’s Cannell Capital owns 4.61 million shares of EVINE Live Inc. (NASDAQ:EVLV) as of December 31.

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The next two pages of this article examine three other filings recently submitted with the SEC.