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Activist shareholder sells more than half its stake in Pier 1 Imports

Shares of Pier 1 Imports surged in December after the Fort Worth-based retailer reported strong third-quarter results.
Shares of Pier 1 Imports surged in December after the Fort Worth-based retailer reported strong third-quarter results. AP

A hedge fund that accumulated a big stake in Pier 1 Imports and threatened a proxy fight to gain a seat on the board sold more than half its shares this month after the retailer’s stock surged higher.

In a Securities and Exchange Commission filing, Alden Global Capital reported selling 4,058,869 shares between Jan. 9 and Jan. 17, reducing its stake in the Fort Worth-based retailer from 9.5 percent to 4.3 percent.

Alden said it sold the shares because of several factors, including rebalancing its portfolio in light of the runup in the stock price.

But Alden continues to believe that Pier 1 shares have a “substantial upside” if Pier 1 properly controls costs and capital allocations, and that shareholders would benefit if board representation were changed, according to the filing, signed by Alden President Heath Freeman.

Alden sold the shares at prices ranging from $8.30 to $8.90 a share. It bought 7.9 million shares last year at prices of $3.86 to $4.16 a share.

Alden disclosed its stake in Pier 1 in September and quickly began agitating for changes. The investment fund met with Pier 1 management and sought a voice in selecting a new CEO to replace Alex Smith, who retired at year’s end. Pier 1 Chairman Terry London is serving as interim CEO as the company searches for a new top executive.

In response to Alden, Pier 1 adopted a “poison pill” shareholder-rights plan to discourage the hedge fund from adding more shares and called Alden’s board ultimatum “not constructive.”

Pier 1 shares began rebounding from low points after the presidential election and surged in December after reporting strong third-quarter results, reaching $9.49 before falling back. On Thursday, shares (ticker: PIR) gained 4 cents to close at $7.69.

Steve Kaskovich: 817-390-7773, @stevekasko

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