In a freshly-amended 13D filing, Bruce Berkowitz’s Fairholme Capital Management LLC reported owning 1.85 million shares of MRC Global Inc. (NYSE:MRC), which constitute only 1.8% of the company’s outstanding shares. This is down from the 5.75 million-share position revealed in the fund’s 13D filing on the company in late February. The mutual fund added about 120,000 shares to its portfolio from the beginning of 2016 through February 22, when the 13D filing was submitted. So why did Fairholme trim its stake in the industrial distributor of pipe, valves and fittings (PVF) to the energy industry so quickly? The 48% gain since February 22 might serve as one explanation for this move. The company’s business is highly dependent upon market conditions, and maintenance and capital expenditures in the energy industry, which were somewhat reflected in MRC Global Inc. (NYSE:MRC)’s 2015 top-line figure.
MRC’s 2015 sales were $4.53 billion, which represented a drop from $5.93 billion in 2014. The company has undertaken a series of moves to adjust its business to the challenging market conditions experienced throughout 2015, which included hiring and salary freezes, as well as a headcount reduction of 800 full-time positions. At the end of February, analysts at Longbow downgraded MRC Global to ‘Neutral’ from ‘Buy’, citing low crude oil and natural gas prices and a sustained decrease in CAPEX investments. Longbow asserted that there was no “tangible catalyst for improved demand on the horizon”. Nonetheless, the recent rally in crude oil prices has acted as such a catalyst, as it may enable some companies to drive up their investments. A total of 21 hedge funds in our system had stakes in MRC at the end of December 2015, amassing almost 22% of the company’s shares. D.E. Shaw & Co. L.P., founded by David E. Shaw, had 2.90 million shares of MRC Global Inc. (NYSE:MRC) in its portfolio at the end of 2015.
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Keith Meister’s Corvex Management LP recently ceased to be the beneficial owner of more than 5% of Vereit Inc. (NYSE:VER)’s shares. As revealed by a Schedule 13D filing, the activist firm currently owns 44.36 million shares of the REIT, which represent 4.9% of its outstanding common stock. This marks a decrease of 35.56 million shares from the stake revealed in the fund’s 13F filing for the December quarter. Vereit Inc. (NYSE:VER) is a full-services real estate operating company that conducts its operations through two business segments: its real estate investment segment, called REI; and its investment management segment, called Cole Capital. The company’s REI segment owns and manages a portfolio of 4,435 retail, restaurant, office and industrial real estate properties. Meanwhile, the Cole Capital segment is responsible for managing the day-to-day operations of certain non-traded real estate investment trusts, for which the company receives compensation and reimbursement. It is important to note that Vereit is among the most-favored REITs in the hedge fund industry (as far as those observed by Insider Monkey) at the end of December 2015, with 35 funds being invested in the company. Vereit pays out an annual dividend of $0.55 per share, which equates to a current dividend yield of 6.46%. Shares of Vereit are down by 13% in the past 12 months, despite having gained almost 10% since the beginning of 2016. Larry Robbins’ Glenview Capital reported owning 17.37 million shares of Vereit Inc. (NYSE:VER) through the latest round of 13F filings.
