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Southeastern Asset Saks’ Biggest Shareholder

Recent investments give the Memphis-based company a 17.8 percent stake in the department store.

Exterior of the department store Saks Fifth Avenue

NEW YORK — Saks Inc. has a new leading shareholder.

Southeastern Asset Management Inc. filed paperwork with the Securities and Exchange Commission Monday showing that the investment fund and its Longleaf Partners Small-Cap Fund affiliate own just under 27 million shares of Saks’ outstanding stock.

The investments, which date back to the third quarter of 2011, give the Memphis-based company a 17.8 percent stake in Saks, above the one held by Mexican billionaire Carlos Slim Helú, who reduced his stake in the retailer to about 23.1 million shares during this year’s third quarter, and Tod’s SpA chief executive officer Diego Della Valle, who continues to own 22.7 million shares. Slim’s investment represents about 15.3 percent of Saks’ equity and Della Valle’s just under 15 percent.

Southeastern, headed by O. Mason Hawkins as chairman and ceo, was an investor in Proffitt’s before it acquired Saks Holdings and became Saks Inc. in 1998. Southeastern held a 6.8 percent stake in the retailer in 2000.

It ceased to be a holder of at least 5 percent of the retailer’s equity in 2006, when the investment company reduced its stake to 2 percent, meaning it was no longer required to disclose its holdings to the SEC.

Southeastern reinvested in Saks in the third quarter of last year, picking up about 13.6 million shares of the retailer’s stock and then acquiring an additional 4.2 million shares in January, raising its holdings to 11.2 percent. The current holdings imply recent purchases of about 9.2 million shares, although documentation of purchases wasn’t available through the SEC’s Web site.

Saks’ shares closed Monday at $10.62, up 7 cents, or 0.7 percent, putting the value of the shares Southeastern bought at the start of the year at about $190 million. This represents a $12 million jump from their worth in late January and makes Southeastern’s total stake, including the shares bought recently, worth about $286.7 million.

Over the course of the last 12 months, Saks shares have ranged from a low of $8.80, reached on Dec. 14 of last year, to a high of $12.14, on April 3.

Officials at Southeastern declined to comment on the equity position, which includes more than 200,000 units in shares underlying convertible bonds. The SEC filing contained standard language stating that investments “were not acquired for the purpose and do not have the effect of changing or influencing the control” of Saks.

Saks executives also declined comment Monday.

Southeastern is the sole manager of Longleaf Partners and is directed by the same team of investment professionals.

Founded in 1975, the firm’s overview states, “We believe we can deliver superior long-term absolute returns and minimize risk of capital loss by owning equity securities in a portfolio of 18 to 22 competitively entrenched, well-managed businesses purchased at steep discounts to their intrinsic values.”

Among its other investments, Southeastern is the largest shareholder of Chesapeake Energy Corp., which earlier this year added R. Brad Martin to its board. Martin was chairman and ceo of Proffitt’s beginning in 1989 and assumed the same post upon its combination with Saks, and rechristening as Saks Inc., in 1998. He became chairman upon Stephen I. Sadove’s appointment as ceo in 2006. He retired in 2007.

For the third quarter ended Oct. 27, Saks posted net income of $22.6 million, or 14 cents a diluted share, compared with net income of $17.8 million, or 11 cents a share for the year-ago period. Those results included a reversal of about $3.3 million in federal income tax reserves deemed no longer necessary. Excluding this item, the company would have recorded net income of $19.3 million, or 12 cents a share, for the latest quarter.

Total sales rose 3 percent to $713.2 million, from $692.3 million a year-ago. Comparable-store sales increased 3.3 percent, which fell below expectations.