Jeffrey Bronchick, portfolio manager and founder of Cove Street Capital LLC, disclosed a 22.1% beneficial ownership in U.S. apparel retailer Cherokee Inc., according to a Schedule 13D filed Feb. 2.
Bronchick holds sole voting power for 25,000 shares of Cherokee's common stock and shares dispositive power for 3,141,020 shares in the retailer's common stock owned by Cove Street Capital.
Cove Street Capital and Bronchick said that they purchased the shares for investment purposes and believed the shares were undervalued, according to the filing. The investor said that it recently held conversations with the company regarding operational improvements and strategic direction and has made suggestions in regard to enhancing the composition of Cherokee's board.
Under a Aug. 11, 2017, common stock purchase agreement, Cove Street Capital acquired 296,208 shares of the issuer's common stock at $4.22 a share. This included a warrant to purchase 59,241 shares within seven years starting March 5. Additionally, under a Dec. 7, 2017 agreement, Cherokee issued Cove Street a warrant to purchase up to 311,111 shares of common stock at $2.25 within seven years of the date.
