Shares of Sears Holdings (SHLD) dropped in afternoon trading after the company said Bruce Berkowitz is leaving its board, effective October 31.

BERKOWITZ LEAVES BOARD: Sears announced this morning that Bruce Berkowitz will step down from its board of directors, effective October 31. Berkowitz, who joined the board of Sears in February 2016, is the chief investment manager of Fairholme Capital Management and is the president and a director of investment firm Fairholme Funds. Fairholme Capital Management is the second largest shareholder of Sears shares behind Sears chairman and CEO Eddie Lampert. "I wish the company and its associates all the best as Sears Holdings continues to execute on its strategic priorities," Berkowitz said in a statement. He did not say why he is stepping down. Lampert said that Berkowitz's "leadership, guidance and counsel as a board member have been invaluable to our company."

WHAT'S NOTABLE: According to regulatory filings, Berkowitz took his first stake in Sears in August 2005 through the Fairholme Fund. According to a June report in The Wall Street Journal, Fairholme has lost 89% of its assets since its peak in 2011 and was staking a comeback partly on his fund's growing bet on Sears. Berkowitz previously supported Lampert's plan to spin off real estate assets and the company's Craftsman brand, which sold to Stanley Black & Decker (SWK) earlier this year.

PRICE ACTION: Sears is down 11.3% to $6.01 in afternoon trading. Shares are down about 35% year-to-date.