As a newly ammendet filing with the Securities and Exchange Commission showed, Matthew Drapkin and Steven R. Becker‘s Becker Drapkin Management has further cut its exposure to PowerSecure International, Inc. (NYSE:POWR). The fund disclosed ownership of some 976,500 shares of the company, down from around 1.40 million shares held earlier. Following the decrease, the investor holds an activist stake that is equal to 4.4% of PowerSecure’s common stock, versus 6.3% disclosed in the previous filing.
Becker Drapkin Management is a small Texas-based fund that is investing primarily on US-listed small cap stocks. The fund holds an equity portfolio worth $181.91 million as of the end of September. In its largest 13F, the investor disclosed that its largest equity position in terms of value is represented by Comverse Inc (NASDAQ:CNSI), a small-cap provider of telecom business solutions. However, this bet has not yet worked out for the fund, as the stock dropped by around 30% since the fund initiated a stake, and lost over 50% since the end of 2013, when the holding was boosted by more than a tenfold, getting on the top spot in the fund’s equity portfolio. However, other holdings of Becker Drapkin showed better returns. For example, among its latest moves, at the end of October the fund reported raising its stake in Fuel Systems Solutions Inc. (NASDAQ:FSYS) to 1.89 million shares, from 1.79 million shares. The stock of Fuel Systems Solutions climbed around 30% since the end of October.
PowerSecure International, Inc. (NYSE:POWR) is another investment made by Mr. Drapkin and Mr. Becker that gained ground over the last several months. The investor has been trimming its stake in the company pretty much since it first disclosed holding shares in May, 2014. As the fund initially reported holding close to 1.98 million shares, the stock appreciated by 30%, while the investor has been selling small amounts of shares from time to time. Becker Drapkin has been also actively trading options of PowerSecure and in its previous filing, reported the sale of 300 ‘Put’ options for $142,500.
Nevertheless, since the beginning of 2015, the stock has already lost 11%, despite reporting a couple of weeks ago that it added around $15 million in new distribution generation, utility infrastructure and energy efficiency businesses. However, PowerSecure International, Inc. (NYSE:POWR)’s stock plummeted by over 50% over the last 52 weeks, taking a hard hit at the beginning of May, after posting disappointing financial results for the first quarter of 2014, which showed a decrease in revenue and a loss of $0.19 per share.
The company meanwhile managed to recover slightly, reducing the loss to $0.02 per share in the third quarter, and analysts expect PowerSecure International, Inc. (NYSE:POWR) to turn back to profit in 2015, with its estimated expected consensus EPS amounting to $0.20, on revenue of $318 million. The company has not yet reported its financial results for 2014, but the consensus EPS loss amounts to $0.35, with revenue of $244 million.
Therefore, it looks like Becker Drapkin found the right time to buy into PowerSecure International, Inc. (NYSE:POWR), by betting on the stock to recover right after the stock dropped on the back of first quarter financial results. A similar strategy was adopted by other investors who either purchased new stakes, or boosted their positions during the second quarter of 2014. However, at the end of June, the position in PowerSecure represented more than 8% of Becker Drapkin’s equity portfolio, versus less than 1.0% in the 13F portfolios of other funds, among those that we track. However, at the end of the third quarter, as Becker Drapkin disclosed trimming its stake by 18%, Ken Grossman and Glen Schneider’s SG Capital Management disclosed a new position in PowerSecure, which contains 917,900 shares, representing 2.86% of the fund’s equity portfolio. Andy Redleaf‘s Whitebox Advisors boosted its stake by 260% during the second quarter, and by 8% during the third quarter to almost 234,900 shares held as of the end of September, but the stake represented only 0.08% of the total equity portfolio.
Analysts also seem optimistic on PowerSecure International, Inc. (NYSE:POWR)’s future prospects, as the stock has an average price target of $15.90, while the consensus rating is ‘Buy’
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