SCCM Exits Unisys Position After Revenue Shortfalls and Execution Setbacks

Schafer Cullen Capital Management, LLC (SCCM) disclosed in its third-quarter investor letter that it fully divested its stake in Unisys Corporation during the three-month period ended 30 September 2025. The decision affects the firm’s Small Cap Value Equity Strategy, which targets companies with market capitalizations generally below the traditional mid-cap threshold.

According to the communication sent to clients, the exit followed several quarters of weaker-than-projected revenue growth at the information-technology services provider. SCCM indicated that delays in scaling key digital-transformation contracts and rising operating expenses limited visibility on near-term profitability, prompting the firm to redeploy capital into holdings it views as offering a better balance of risk and return.

The move comes against a backdrop of robust gains in U.S. small-cap equities. For the quarter, the Russell 2000 Index advanced 12.4 percent, while the Russell 2000 Value Index rose 12.6 percent. SCCM’s Small Cap Value Equity Strategy outpaced both benchmarks, returning 14.4 percent before fees and 14.2 percent after fees. The firm cited an improved appetite for risk, sustained economic resilience, and expectations for lower interest rates as primary drivers of the broader market rally.

Despite the favorable environment for small-cap stocks, Unisys shares lagged markedly. The company’s stock price declined 25.21 percent in the month preceding 26 November 2025 and fell 67.49 percent over the prior 12 months. On that date, the shares closed at USD 2.64, giving the Blue Bell, Pennsylvania-based company a market capitalization of approximately USD 188.2 million.

SCCM attributed the underperformance to revenue trajectories that did not meet internal forecasts, as well as “persistent execution challenges” in winning and expanding digital-transformation work. The letter noted that margin expansion had stalled amid higher cost pressures and that project ramp-ups had been deferred, factors the firm believes materially reduced the stock’s risk-adjusted return potential. Consequently, the position was liquidated during the quarter.

Unisys remains followed by a portion of the hedge-fund community, though overall ownership levels are modest. Data compiled at the end of the second quarter showed 24 hedge-fund portfolios with exposure to the name, up slightly from 23 in the prior quarter. The figure underscores ongoing, albeit limited, institutional interest in the company despite the recent decline in share value and the headwinds highlighted by SCCM.

The company provides a mix of cloud, application modernization, and infrastructure services to commercial and government clients. Its fortunes have been tied in part to demand for large-scale technology refresh projects. Investors had expected that ongoing corporate digitization and public-sector modernization initiatives would bolster top-line growth, but recent contract start-date slippages and elevated labor costs have tempered those expectations.

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SCCM’s letter did not specify the exact size of the Unisys position at the time of sale, nor did it provide details on replacement holdings. The manager emphasized, however, that the strategy continues to look for companies trading at substantial discounts to intrinsic value and possessing catalysts for earnings acceleration. The portfolio typically holds between 30 and 40 names, with a focus on businesses that can improve free-cash-flow generation in a reasonable time frame.

Unisys is scheduled to report fourth-quarter results in early 2026. Analysts will monitor whether management can stabilize revenue and reignite margin expansion after the recent setbacks. In the meantime, the company remains subject to standard periodic disclosure requirements under U.S. securities law. The latest filings, available through the U.S. Securities and Exchange Commission, provide additional insight into revenue mix, cost structure, and contract backlog.

For SCCM, the sale reflects a broader discipline of trimming or exiting positions where the original investment thesis no longer holds. The firm continues to report quarterly on portfolio changes, performance attribution, and market outlook, offering clients transparency into the decision-making process that guides the Small Cap Value Equity Strategy.

Crédito da imagem: Unisys Investor Relations