Third Point's Technicolor Stake ~ market folly

Thursday, March 8, 2012

Third Point's Technicolor Stake

Since the site so often focuses on US traded securities, every once in a while we like to highlight notable activity in foreign markets as well. We've highlighted UK positions hedge funds have been active in, and now we'll also cover relevant positions in French markets.

A perfect example of this is activity from Dan Loeb's hedge fund Third Point and Philippe Laffont's Coatue Management.

Third Point crossed the 5% ownership threshold on shares of Technicolor (EPA:TCH) traded on Euronext Paris on January 24th, 2012. As of that date, the hedge fund owns 17,149,658 shares representing 171,496,580 voting rights, or 7.66% of share capital and voting rights of the company.

What's interesting is that their regulatory filing in France also highlights that they crossed the threshold due to taking delivery of shares previously subject to "contract for difference" (CFD), a tool we've talked about before that many hedgies use (click on the link to learn more about it).

Technicolor had previously been listed in Third Point's top holdings, but other stakes have replaced it in recent months. This regulatory filing provides the most recent data point as to how large Third Point's equity position in the company is. We've seen Technicolor appear in their portfolio as far back as March 2011 (when they've owned multiple securities of the issuer).

Coatue Management Short Technicolor in the Past

Technicolor is also the perfect example of how there are always two sides to a trade. Philippe Laffont's hedge fund Coatue Management was previously short Technicolor (and they could possibly still maintain a small short). Coatue disclosed their short with French regulators back in October 2011 with a -3.04% short position.

Over the next three months, they reduced their position to -0.97%. And most recently, they filed a disclosure on February 6th notifying French regulators that they had gone below the -0.5% threshold required for reporting.

So while it's still possible Coatue holds a very small short in the company, they won't have to report anything until they cross the -0.5% ownership stake threshold again.

About Technicolor

Per Google Finance, Technicolor "is engaged in the development of broadcasting technologies. It supplies production, postproduction and distribution services for content creators, broadcasters and network operators. Technicolor’s activity covers services for Content Creators; digital home products and software service platforms, and research and licensing. The Company is organized around three operating divisions: Entertainment Services, Connect and Technology."

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