(Reuters) – Sears Holdings Corp (SHLD.O) on Monday said that Bruce Berkowitz, head of the company’s second-biggest investor, resigned from the board of directors less than two years after he sought a seat to help turn the struggling department store chain around, sending Sears stock down as much as 15 percent.
The decision by Berkowitz, the head of investor fund Fairholme Capital Management, was not the result of a disagreement over operations, policy or practices, Sears said in a statement.
A fund managed by Fairholme Capital Management disposed of 3.14 million Sears shares on Oct. 12, according to a regulatory filing. As part of a previously approved plan of liquidation, the fund distributed the stock to the fund’s investors, including 727,816 shares of Sears stock to Berkowitz.
The fund in liquidation, which a person familiar with Fairholme identified as Fairholme Partnership LP, also distributed warrants to buy Sears stock.
Hoffman Estates, Illinois-based Sears has been closing scores of its weaker Kmart and namesake department stores, striking brand licensing deals and promoting its shopper loyalty program in efforts to turn itself around.
Sears named Berkowitz to its board in February 2016, expanding the number of directors to 10, after Berkowitz said he wanted an active role in returning Sears to profitability. He also said he wanted greater disclosure of assets and strategy.
“Mr. Berkowitz believes that he has achieved that objective, and was pleased to have the opportunity to provide input during the formulation of the company’s strategic restructuring program,” Fairholme said in a statement.
Fairholme said the firm remains a significant investor in Sears. As of June 30, Fairholme owned 26.9 percent of Sears stock, according to Thomson Reuters data, and only company Chairman Eddie Lampert himself holds a bigger stake.
Sears said Lampert appreciated Berkowitz’s board tenure. “Mr. Lampert and Mr. Berkowitz have a long-standing partnership and continue to have great respect for each other,” said spokesman Howard Riefs of Sears.
Sears announced last February a plan to cut costs by $1 billion and reduce debt and pension obligations. Its stock more than doubled in the months following the turnaround plan, and in May Sears reported its first quarterly profit in two years.
The gains in the share price, however, have eroded since summer. On Monday afternoon Sears shares were down about 10.7 percent at $6.04 on Nasdaq, as the stock posted it biggest one-day drop in more than three years, according to Thomson Reuters data. Earlier on Monday, the shares were just 25 cents above the record low price set in February.
On an analyst call in June, Berkowitz said Sears was worth $90 per share based on its real estate and brands, but operating losses were undermining that value.
He said on the call he continued to invest in Sears because the stock was falling faster than the net value of Sears’ assets. Fairholme had invested 9.7 percent of its net assets in Sears, according to a May 31 securities filing.
Reporting by Tom Hals in Wilmington, Delaware; Editing by Leslie Adler and Lisa Shumaker