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Steelhead Partners Dumping Resolute Forest Products Inc (RFP)

Steelhead Partners, managed by Michael Johnston, continues to cut its exposure to Resolute Forest Products Inc (NYSE:RFP). According to a new filing with the U.S. Securities and Exchange Commission, Steelhead Partners recently sold 217,600 common stock shares of Resolute Forest Products Inc (NYSE:RFP) at an average price of around $16.4 per share in multiple transactions. Following the sale, Steelhead Partners owns 11.93 million Resolute Forest Products Inc (NYSE:RFP) shares, down from 12.15 million shares the fund held previously.

Michael Johnston - Steelhead Partners

Washington-based Steelhead Partners was founded by Scott Schaefer and Michael Johnston in late 1996. Previous to founding Steelhead, Johnston had worked at Prudential Insurance and Loews Corporation, where Scott Schaefer worked as well. Steelhead Partners usually uses contrarian investment strategies. According to its own website, Steelhead’s “investment style is characterized by finding names that are out-of-favor and under-followed by Wall Street,” which have consistently led it to opportunities with exceptional risk/reward profiles. According to its latest 13F filing, the fund holds an equity portfolio worth more than $1.18 billion, with a strong focus on technology stocks.

As of the end of the third quarter of 2014, Steelhead Partners reported holding 12.58 million shares of Resolute Forest Products Inc (NYSE:RFP), equal to 16.69% of the fund’s portfolio. Resolute Forest Products Inc (NYSE:RFP), Globalstar Inc. (NYSEMKT:GSAT), Level 3 Communications Inc. (NYSE:LVLT) were the Steelhead Partners’ top three holding for the third quarter. In Globalstar Inc. (NYSEMKT:GSAT) and Level 3 Communications Inc. (NYSE:LVLT), the fund held 30.85 million shares and 2.06 million shares, respectively.

Last year, Steelhead Partners sold a number of Resolute Forest Products Inc (NYSE:RFP) shares in several transactions. In October 2014, the fund reported selling 102,917 shares of the company, bringing its stake to 12.15 million shares. In the second week of October, the fund disclosed selling over 227,000 shares of Resolute Forest Products Inc (NYSE:RFP) at an average price of $16.19 per share in several tranches on October 3, 6 and 7. In the beginning of the second quarter of 2014, Steelhead Partners reported the sale of 247,346 shares in seven transactions at prices varying between $19.75 and $20.00 apiece.

Resolute Forest Products Inc. (NYSE:RFP) is a $1.5 billion market cap global forest products company that owns or operates pulp and paper mills and wood products facilities in the United States, Canada and South Korea. Its segments include newsprint, coated papers, specialty papers, market pulp and wood products. The company’s net income dropped to $17 million, or $0.18 per share, from $29 million, or $0.31 per share, in the same quarter of 2013. The company collected $1.1 billion in sales in the third quarter, representing a drop of $34 million, as compared to the same quarter of 2013.

Shares of Resolute Forest Products (NYSE:RFP) traded up 0.85% on Tuesday, to $16.61. The stock moved up 0.48% during the last six months. However, the stock shows a year-to-date performance of -5.86%. The consensus average target price for the stock is $19.31, while the consensus average recommendation is ‘HOLD.’

Last month, Resolute Forest Products Inc. (NYSE:RFP) announced that it is closing 465,000 metric tons of newsprint production capacity in Canada. According to the company, its decision to reduce newsprint capacity is a result of the ongoing weakness in the global newsprint business, exacerbated by fiber-related issues, including both availability and costs, as well as transportation challenges. The company’s plans are to close the Iroquois Falls (Ontario) newsprint mill, as well as paper machine #1 at Baie-Comeau (Quebec) and paper machine #4 at Clermont. The Iroquois Falls mill employs approximately 180 people and has an annual production capacity of 210,000 metric tons of newsprint. The paper in Clermont will be permanently closed on or about January 30, 2015. The closures at Baie-Comeau and Clermont will result in the loss of approximately 120 positions and the permanent removal of approximately 255,000 metric tons of newsprint capacity.

In its latest 13F, Fairfax Financial Holdings, led by Prem Watsa, disclosed holding 29.04 million shares of Resolute Forest Products (NYSE:RFP). Chou Associates Management, managed by Francis Chou, disclosed ownership of around 4.12 million shares of the company, the stake remained unchanged over the quarter. Another investor, Contrarian Capital, run by Jon Bauer, reported holding 837,621 shares of Resolute Forest Products (NYSE:RFP), according to our records.

Disclosure: none

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