This Small Illinois-Based Hedge Fund Outperformed Several Large Peers in Q1

Though Central Square Management reduced its stake in Silver Wheaton Corp. (USA) (NYSE:SLW) by 41% to 431,148 shares during the fourth quarter, the company still ended up being the fund’s third-largest equity going into 2016. Shares of Silver Wheaton Corp. (USA) (NYSE:SLW) appreciated by 34% during the first quarter, but have fallen by over 10% in the last three trading sessions after the company announced a secondary public offering. While Silver Wheaton Corp. (USA) (NYSE:SLW) had initially planned to sell slightly more than 30 million shares at $16.60 per share to raise $500 million, on March 31 it increased the size of its public offering to 33.14 million shares at the same price in order to raise $550 million. According to the company’s press release, it plans to use the proceeds from the offering to repay a line of credit drawn in November for its $900 million purchase of future silver production at the Antamina mine in Peru. While analysts acknowledged that the company has made a smart move by going for a public offering when its stock has appreciated significantly, they also expressed concern over the increase in size of the public offering, which will further dilute existing shareholders’ equity and which could suggest that the company doesn’t have ample liquidity.

Moving on,  Tandy Leather Factory, Inc. (NASDAQ:TLF) is one of Central Square Management’s oldest investments, as the fund initiated a stake in the company during the fourth quarter of 2010. During the fourth quarter of 2015, it reduced its stake in Tandy Leather Factory, Inc. (NASDAQ:TLF) marginally, by 2% to 742,307 shares worth $5.45 million as of December 31. The fund trailed only Gregory Bylinsky and Jefferson Gramm’s Bandera Partners as Tandy Leather Factory, Inc. (NASDAQ:TLF)’s largest shareholder in our database at the end of December. Shares of Tandy Leather have largely been range-bound this year and currently trade almost flat year-to-date. On March 11, the company reported its fourth quarter earnings, declaring EPS of $0.24 on revenue of $24.20 million. For the same quarter of the previous year, the company delivered nearly identical results: EPS of $0.24 on revenue of $24.47 million.

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PICO Holdings Inc (NASDAQ:PICO) has been Central Square Management’s largest equity holding since the third quarter of 2014, when the fund initiated a stake in the company and launched its activist campaign against it. Amid a 6.6% rise in PICO Holdings Inc (NASDAQ:PICO)’s stock during the fourth quarter, Central Square Management reduced its stake in the company by 6% to 1.24 million shares worth $12.82 million on December 31. However, according to a recent regulatory filing from the fund, it has increased its stake in the company to 14.1 million shares through March 18, or nearly 6.1% of the outstanding shares of PICO Holdings Inc (NASDAQ:PICO). The filing also revealed that the fund has reached an agreement with PICO Holdings under which the company will increase the size of its Board to nine members from seven and appoint Andrew F. Cates as a Class III Director and Daniel B. Silvers as a Class I Director to occupy the newly-created positions. With ownership of over 1.4 million shares of the company, Chuck Royce‘s Royce & Associates was the largest shareholder of the company in our database at the end of December.

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