Friday, March 18, 2016

Carl Icahn Sells More Nuance Communications, Files 13D on Manitowoc Foodservice

Activist investor Carl Icahn has made a few more SEC filings as of late.

First, he has updated his position in Nuance Communications (NUAN).  We already highlighted how he trimmed his NUAN stake earlier this month and he has done so again.

A 13G filed with the SEC shows that Icahn now owns around 30 million shares of NUAN, or around 9.88% of the company.  This is down from the 34.4 million shares he owned recently.  The filing shows he sold shares on March 16th at a price of $19.00.  NUAN shares currently trade around $19.49.

Per Google Finance, Nuance Communications is "a provider of voice and language solutions for businesses and consumers across the world. The Company's solutions are used in healthcare, mobile, consumer, enterprise customer service, and imaging markets. The Company offers accuracy, natural language understanding capability, domain knowledge and implementation capabilities. The Company's solutions are based on the Company's voice and language platform and are used by businesses for tasks and services, such as requesting information from a phone-based self-service solution, dictating medical records, searching the mobile Web by voice, entering a destination into a navigation system, or working with portable document format (PDF) documents. The Company offers its solutions to its customers in a range of ways, including through products, hosting, professional services and maintenance and support. The Company operates in four segments: Healthcare, Mobile and Consumer, Enterprise, and Imaging." 

Icahn Files 13D on Manitowoc Foodservice

Secondly, Icahn has also filed with the SEC regarding shares of Manitowoc Foodservice (MFS).  Per the filing, Icahn now owns 7.73% of the company with over 10.58 million shares.  Icahn acquired these shares in connection with the company's separation from Manitowoc, a catalyst he pushed for. 

Icahn gets board representation on this new entity as part of a prior agreement.  The filing was made due to activity on March 4th.

Per Google Finance, Manitowoc Foodservice, Inc. is a commercial foodservice equipment company. The Company designs, manufactures and services an integrated portfolio of hot and cold category products. The Company supplies foodservice equipment to commercial and institutional foodservice operators, such as full-service restaurants, quick-service restaurant chains, hotels, caterers, supermarkets, convenience stores, business and industry, hospitals, schools and other institutions. The Company operates through three segments: Americas, EMEA and APAC. The Americas segment includes the United States, Canada and Latin America. The EMEA segment consists of Europe, Middle East and Africa, including the United Kingdom, the Nordic countries, Germany, France, Spain, Italy and Switzerland, as well as Egypt, South Africa and Dubai. The APAC segment consists of markets in China, Singapore, Australia, India, Malaysia, Indonesia, Thailand and the Philippines.

Pershing Square Trims Mondelez Stake

Bill Ackman's hedge fund firm Pershing Square Capital has filed an amended 13D with the SEC regarding its stake in Mondelez (MDLZ).  It seems that Pershing sold around 20 million shares. 

After these transactions, Pershing now owns 5.6% of the company with over 88.1 million shares.  This is broken down into 22.9 million shares of common stock and 65.25 million shares worth of exposure via call options.  Pershing listed all of their separate transactions in a filing here.

As to the reason for the sales, the filing notes that, "The Reporting Persons reduced their stake in the Issuer because the stake had become an outsized position of their portfolio in light of its initially large size and its outperformance relative to other holdings. The Reporting Persons are reducing the position size for portfolio management purposes only."

It is of course worth noting that Pershing is currently facing a big loss thus far this year, mainly due to its Valeant Pharmaceutical (VRX) position. 

The Wall Street Journal notes that Pershing was down 26% for the year and that "Ackman told investors Wednesday that the Mondelez sale would leave Pershing with 'substantial uninvested cash'  ... and assured investors that he had no immediate plans to sell other assets."

Hedge Fund Links ~ 3/18/16

What hedge funds get right [A Wealth of Common Sense]

Allan Mecham's (Arlington Value) annual letter [ValueWalk]

Top 10 hedge fund industry trends for 2016 [FINalternatives]

Bridgewater grapples with succession plans [WSJ]

Cohen's Point72 hires sports psychologist as performance coach [Reuters]

The unlamented decline of hedge funds [MoneyWeek]

The secretive hedge fund that's generating huge profits for Yale [Bloomberg]

This SAC alum stands out in hedge fund rankings [Bloomberg]

Global value investor steps back into the fray [Barrons]

Former JAT Capital partner launches fund [Reuters]

Is the hedge fund era ending? [Seeking Alpha]

Tiger Global has rough start to the year [Reuters]

Three characteristics of a successful investment firm [A Wealth of Common Sense]

Hedge fund 'ask me anything' [Reddit]

Wednesday, March 16, 2016

What We're Reading ~ 3/16/2016

Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism [Jeff Gramm]

Two powerful mental models: network effects and critical mass [Andreessen Horowitz]

How to be wrong as an investor [A Wealth of Common Sense]

A look at the concept of moats in investing [Intrinsic Investing]

The great race: e-commerce in India [The Economist]

A look inside Google's DeepMind [The Verge]

Amazon's Echo brims with groundbreaking promise [NYTimes]

In-depth analysis of Moody's (MCO) [Value Seeker]

A look at Visa & Mastercard [JanaV]

American Express, Synchrony Financial & the changing credit card landscape [PunchCard]

Amex: cheap blue chip or value trap? [Value & Opportunity]

How credit cards tax America [Priceonomics]

After TV: Video's future will be bigger, more diverse & precarious than its past [Redef]

John Malone 'cable cowboy' faces test in rounding up the right mix of assets [Variety]

The television has a business model problem and it's killing good TV [Redef]

The craft beer bubble [VinePair]

The rise and final hours of Chesapeake's Aubrey McClendon [Bloomberg]

Tuesday, March 15, 2016

Graham & Doddsville New Issue: Craig Effron, Jon Salinas, Jeff Gramm & More

The Winter 2016 edition of the Graham & Doddsville newsletter was released and if you haven't had a chance to view it, it's posted below.  The Columbia Business School publication features some interesting interviews with money managers that don't necessarily get as much spotlight.  It features:

- An interview with Craig Effron of Scoggin Capital Management

- An interview with Jon Salinas of Plymouth Lane Capital (previously was with Marble Arch)

- Interview with Jeff Gramm of Bandera Partners, who is also the author of the recently released book Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism

- Interview with Shane Parrish, founder of the popular Farnam Street blog

Lastly, the issue also features stock pitches from Columbia Business School students.  They pitch short Dexcom (DXCM), short Quest Diagnostics (DGX), and long XPO Logistics (XPO).

Embedded below is the latest issue of Graham & Doddsville:

You can download a pdf copy here.

Jeff Ubben's Interview with CNBC

CNBC's Kelly Evans sat down with activist investment manager Jeff Ubben of ValueAct Capital recently.  Here's a summary of his latest thoughts:

On his recent portfolio activity: "We have been selling a number of our companies where we have been there, done all we could, the stocks are fairly valued... and it's been hard to redeploy that."  They sold some Adobe, MSCI, Microsoft, and Motorola Solutions.

He notes the only compelling investment they've found value in has been Rolls Royce (RR.L).

On valuations:  He notes that last valuation cycle the bubble was largely public and this time around, more and more companies are private so the bubble could burst slower he guessed.

On TwentyFirst Century Fox (FOX/FOXA): He likes the transition from old media to new media and wants to 'get rid of the middleman' by going direct to consumer.  He thinks James Murdoch is terrific and can lead the change.

On his stakes in Halliburton (HAL) / Baker Hughes (BHI):  If the deal closes, he thinks ValueAct will do really well there.  If it doesn't close, he says people have kind of forgotten what happens to Baker's balance sheet with receiving a break-up fee.

On Valeant (VRX):  This interview was shown yesterday and today VRX is down 47% on guidance cut and default worries.  But Ubben's comments at the time were that CEO Michael Pearson is "incredibly driven."  ValueAct spearheaded the effort to place him as CEO many years ago.  Ubben also said that "we're solving problems (at the company) as we speak" but also noted that "we haven't been able to control the narrative at all."  ValueAct has owned VRX for years and at one point it was a hugely successful play for them, but with shares plummeting this year, they've basically come close to round-tripping their gains.

Embedded below is the video of Ubben's interview:

7th Annual Free March Madness Bracket Contest

It's baaaaack!  College basketball's championship tournament is here and it's time for the 7th annual Market Folly Madness.  Get ready to fill out your bracket as entry is completely free.

Join Market Folly Madness

To join the free contest, click here:

(If you don't have a CBS Sports account, create one for free)

Group Password: folly

Contest Prizes

1st place: A 1-year subscription to our Hedge Fund Wisdom newsletter ($300 value)

2nd place: A copy of Michael Lewis' most recent book on Wall Street: Flash Boys

3rd place:  A DVD copy of the recent movie The Big Short when it is released

To be eligible, you must fill out your bracket before the start of the main games on Thursday March 17th.  Only one entry per person.  Good luck!