Three hedge funds have recently made changes in their activist stakes in Vitamin Shoppe Inc (NYSE:VSI), TeleCommunication Systems, Inc. (NASDAQ:TSYS), and Career Education Corp. (NASDAQ:CECO), according to filings with the SEC. First off is Clint Carlson‘s Carlson Capital, which acquired about 919,700 shares of Vitamin Shoppe to put the total stake at 1.59 million shares. J. Carlo Cannell‘s Cannell Capital reduced its stake in TeleCommunication Systems to 3.12 million shares. The current holding represents about 5.59% of the company’s outstanding stock. The securities are indirectly owned through the fund’s investment vehicles. Meanwhile, Richard Blum‘s Blum Capital Partners also trimmed its stake in Career Education by 805,000 shares to 3.94 million shares.
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Carlson’s holding in Vitamin Shoppe Inc (NYSE:VSI) represents 5.34% of the company’s outstanding common stock and was acquired through the affiliated six Black Diamond funds and Asgard Investment Corp. The additional stake was purchased for about $32.76 million. The Dallas-based Carlson Capital was founded in 1993 with an investment approach that broadly focuses on profiting from risk arbitrage, convertible arbitrage, distressed/credit arbitrage as well as the traditional long/short strategies. The fund’s strategy is a culmination of Carlson’s years of experience as the head of risk arbitrage for Bass Brothers.
Vitamin Shoppe Inc (NYSE:VSI)’s stock is down by about 11.82% year to date, even though the fall was partially interrupted by a spike in the stock price following news about Carlson’s activism in the company. The $1.28 billion manufacturer of vitamins and nutritional supplements had been engulfed in merger speculations with a much more profitable GNC Holdings Inc (NYSE:GNC), last year. Vitamin Shoppe Inc (NYSE:VSI) investors might think that the merger is back on the cards. However, another reason for Carlson’s investment in the company could be to profit from its low valuation as it is transitioning in accordance with the strategies of its new CEO Colin Watts. According to our database, Ken Griffin’s Citadel Investment Group was the largest stockholder of Vitamin Shoppe Inc (NYSE:VSI), prior to Carlson’s transaction, with about 1.45 million shares valued at $70.62 million at the end of 2014.
Cannell Capital has been in business for quite some time now, since it was established back in 1992. Carlo Cannell had prior experience working at the San Fransico-based investment bank, Dakin Securities before he set up his own shop. The fund’s equity portfolio had a market value of $302.46 million at the end of the fourth quarter with about 31% of that value invested in the information technology sector.
The stock of TeleCommunication Systems, Inc. (NASDAQ:TSYS) gained around 33.33% over the past year and is trading at a forward earnings multiple of 10.54. The $201.36 million technology company recently signed a three year licensing agreement with ISACA, the provider of practical guidance and tools for businesses using information systems, for its cybersecurity curriculum, Art of Exploitation (AoE) and the learning tool, PerformanScore. Matthew Drapkin and Steven R. Becker’s Becker Drapkin Management increased their stake in TeleCommunication Systems, Inc. (NASDAQ:TSYS) by 119% during the fourth quarter to 3.69 million shares.
Career Education Corp. (NASDAQ:CECO)’s stock declined by 38.29% year to date, despite a 17% spike in March after the company reported a much smaller loss than the analysts expected. Along with Career Education Corp. (NASDAQ:CECO), other for-profit education companies have come under selling pressure lately owing to the recent development that led Corinthian Colleges, one of the largest for-profit college chains, to close all its schools. Following a lengthy government investigation in which it was found that Corinithian had been rigging job placement rates, the easy access to student loans that the company was thriving on has been severed.
Blum’s stake in Career Education Corp. (NASDAQ:CECO) is reflective of the fund’s focus on small and mid-cap companies. The San Francisco based investment firm has a long history dating back to 1975, when it was established. The market value of the fund’s portfolio stood at $578.01 million at the end of the fourth quarter. Among the funds that we track, 15 had investments totaling $91.16 million in Career Education Corp. (NASDAQ:CECO), at the end of 2014, as compared to 12 hedge funds with $66.16 million. Eric Semler‘s TCS Capital Management was one of them.
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