Monday, August 21, 2017

Brand New Hedge Fund Wisdom Issue Now Available

Want to find out what stocks top hedge funds have been buying, selling, and shorting?  Our 86-page quarterly newsletter summarizes the latest 13F filings of 25 top funds.  The brand new Q2 issue is now available.  Subscribers please login at www.hedgefundwisdom.com to download.

Inside The New Issue

- Investment Thesis Summaries on O'Reilly Automotive (ORLY) and Energy Transfer Partners (ETP).  Quickly get up to speed on the bull thesis and bear thesis.

- New Consensus Buy / Sell Lists: See the most popular stocks among top hedge funds

- Reveals Latest Portfolios of 25 Top Managers: Appaloosa, Lone Pine, Baupost Group, Viking, SPO Advisory and 20 other top funds (full list here). Includes European short sale positions where applicable.


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Friday, August 11, 2017

ValueAct Capital Boosts Seagate Position

Jeff Ubben's activist investment firm ValueAct Capital has filed a 13D with the SEC regarding its stake in Seagate Technology (STX).  Per the filing, ValueAct now owns 7.2% of the company with 21 million shares.

The filing notes they've had talks with officers and directors of the company and will continue to do so.  ValueAct was buying on July 29th, 31st as well as August 1st, 2nd, 3rd, 4th, 7th, 8th, and 9th.  In total, they purchased 7,184,235 shares in a range between $32.19 and $33.50. 

We've highlighted how recently ValueAct has been trimming numerous positions, and it looks like this is where some of the proceeds ended up.

Per Google Finance, Seagate is "a provider of electronic data storage technology and solutions. The Company's principal products are hard disk drives (HDDs). In addition to HDDs, it produces a range of electronic data storage products, including solid state hybrid drives, solid state drives, peripheral component interconnect express (PCIe) cards and serial advanced technology architecture (SATA) controllers. Its storage technology portfolio also includes storage subsystems and high performance computing solutions. Its products are designed for applications in enterprise servers and storage systems, client compute applications and client non-compute applications. It designs, fabricates and assembles various components found in its disk drives, including read/write heads and recording media. Its design and manufacturing operations are based on technology platforms that are used to produce various disk drive products that serve multiple data storage applications and markets."



Hedge Fund Links ~ 8/11/17


Risks are rising while low risks are discounted [Ray Dalio]

Activist hedge funds target bigger and bigger US companies [CNBC]

Sustainability of hedge fund reinsurers questioned [Business Insurance]

Mega hedge funds are reporting big gains [Bloomberg]

A look at Michael Hintze of CQS [AFR]

Lessons from a trading great: Stanley Druckenmiller [Macro Ops]


Thursday, August 10, 2017

Paulson & Co Trims Valeant Pharmaceuticals Stake

John Paulson's hedge fund firm Paulson & Co has filed a 13D with the SEC regarding its stake in Valeant Pharmaceuticals (VRX).  Per the filing, Paulson & Co now owns 6% of VRX with 20.83 million shares (but note this excludes cash-settled swaps representing economic exposure comparable to 259,500 additional shares of common stock).

This means they reduced their position size by just under one million shares since June when they previously disclosed a prior sale as well.  The latest filing was made due to portfolio activity on August 9th and they sold at $14.6595.

We've highlighted other recent portfolio activity from Paulson & Co here.

Per Google Finance, Valeant Pharmaceuticals is "a pharmaceutical and medical device company. The Company is engaged in developing and marketing a range of branded, generic and branded generic pharmaceuticals, over-the-counter (OTC) products, and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices). It operates through two segments: Developed markets and Emerging markets. In the Developed Markets segment, it focuses on the areas of dermatology, neurology, gastrointestinal disorders, and eye health therapeutic classes. In the Emerging Markets segment, it focuses on primarily on branded generics, OTC products and medical devices. Its pharmaceutical products include Xifaxan, Solodyn and Glumetza. Its OTC products include PreserVision, Biotrue and Boston. Its other generic products include Latanoprost and Metronidazole. Its ophthalmic surgical products include intraocular lenses, such as Akreos, enVista, Crystalens and Trulign."


ValueAct Capital Buys Some Trinity Industries, Sells Some Willis Towers Watson

Jeff Ubben's activist firm ValueAct Capital has filed two Form 4's with the SEC.


ValueAct Acquires Some Trinity Industries Shares

First, they've purchased more Trinity Industries (TRN) according to their SEC filing.  On August 7th, 8th, and 9th they acquired a total of 60,819 shares at prices of $28.3, $28.5, and $28.47.  After these buys, ValueAct now owns over 15.96 million TRN shares.

Per Google Finance, Trinity Industries is "a diversified industrial company that owns businesses providing products and services to the energy, chemical, agriculture, transportation and construction sectors. The Company's products and services include railcars and railcar parts; parts and steel components; the leasing, management and maintenance of railcars; highway products; construction aggregates; inland barges; structural wind towers; steel utility structures; storage and distribution containers, and trench shields and shoring products. The Company's segments include the Rail Group, Construction Products Group, Inland Barge Group, Energy Equipment Group, Railcar Leasing and Management Services Group, and All Other. Its All Other segment includes its captive insurance and transportation companies, and other peripheral businesses. It manufactures a line of railcars, including autorack cars, box cars, covered hopper cars, gondola cars, intermodal cars, open hopper cars and tank cars."


Ubben's Firm Trims Willis Towers Watson Stake

Second, ValueAct has sold some Willis Towers Watson (WLTW) according to a separate Form 4 filed with the SEC.  On the same dates (August 7th through 9th), Ubben's firm sold 820,000 shares of WLTW at prices of $149.78, $149.76, and $149.53.  After these sales, ValueAct still owns over 5.78 million WLTW shares.

Per Google Finance, Willis Towers Watson is "a holding company. The Company operates as a global advisory, broking and solutions company. It is engaged in offering risk management, insurance broking, consulting, technology and solutions, and private exchanges. The Company operates through eight segments: Willis International; Willis North America; Willis Capital, Wholesale & Reinsurance (CWR); Willis GB; Towers Watson Benefits; Towers Watson Exchange Solutions; Towers Watson Risk and Financial Services; and Towers Watson Talent and Rewards. The Willis GB segment comprises four business units: Property and Casualty, Transport, Financial Lines and Retail Networks. The Willis Capital Wholesale and Reinsurance segment includes Willis Re; Willis Capital Markets & Advisory; Willis' wholesale business, and Willis Portfolio Underwriting Services. The Willis North America segment provides risk management, insurance brokerage and related risk services."

We just touched on some other portfolio activity from ValueAct yesterday as well.


Fairholme Capital Reduces Sears Canada Position

Bruce Berkowitz's investment firm Fairholme Capital has filed an amended 13D regarding shares of Sears Canada (SRSC).  Per the filing, Berkowitz now owns 18.7% of SRSC with just over 19 million shares.

This is a decrease of over 2.39 million shares since the end of July when Fairholme reported owning over 21.43 million SRSC shares. 

The latest portfolio activity comes in late July and early August as Fairholme sold shares as high as $0.61 and as low as $0.25.  After this round of sales, Fairholme still owns 19 million SRSC shares.

We've covered other recent portfolio activity from Fairholme Capital here.



Wednesday, August 9, 2017

What We're Reading ~ 8/9/17


Hot stock rally tests the patience of a choosy lot: value investors [WSJ]

Buffett nears a milestone he doesn't want: $100 billion in cash [Bloomberg]

User/subscriber economics: value dynamics [Aswath Damodaran]

How China's DiDi is taking over the world before Uber [Forbes]

Flywheel effect: why positive feedback loops are a meta-competitive advantage [Medium]

Tesco: why Amazon will not kill this business [Contrarian Edge]

US credit card debt surpasses record set at brink of crisis [Bloomberg]

If retail is dying, why is money pouring into malls? [Bloomberg]

When will the tech bubble burst? [NYTimes]

The problem with meal kits [WSJ]

How credit raters avoided reform after the financial crisis [Bloomberg]

Profile of Vineyard Vines [Boston Magazine]

Have smartphones destroyed a generation? [The Atlantic]


Ruane Cunniff (Sequoia Fund) Investor Day Transcript 2017

Ruane, Cunniff & Goldfarb recently released the transcript from their investor day a few months ago.  Known as the managers of the Sequoia Fund, David Poppe and his team talk about many of their investments.

As of the end of June, their top ten holdings were:

Berkshire Hathaway (BRK A / BRK B) 11.28%
US Treasury Bills & Cash 8.65%
MasterCard (MA) 7.72%
Alphabet (GOOGL & GOOG) 6.5%
TJX (TJX) 5.93%
Dentsply Sirona (XRAY) 5.3%
Carmax (KMX) 5.04%
Constellation Software (CSU) 4.83
Rolls Royce (RR.LN) 4.74%
Liberty Media Corp 4.13%

They talked about what they often find in their top investments:

"Hopefully that gives you a sense of the kinds of companies we want to buy: high-quality enterprises trading at discounts to their intrinsic value, with long-duration growth opportunities.  I would note that every great outperformer we have purchased during my eighteen years here - from Fastenal to Idexx to Mastercard to O'Reilly to Precision Castparts to Sirona to TJX - had something in common.  And it was not a low P/E at the time we first invested.  It was a long growth runway and, most often, a long organic-growth runway."

The transcript that follows touches on their thoughts on Priceline.com (PCLN), the threat of Amazon (AMZN) to various businesses, and some of their holdings like TJX and O'Reilly Auto, as well as other positions like Rolls Royce and Charles Schwab.

Embedded below is Sequoia Fund / Ruane Cunniff's 2017 Investor Day Transcript:




You can download a .pdf here.

For more from this firm, you can view their transcript from last year here as well.


ValueAct Capital Reduces Microsoft Stake

Jeff Ubben's activist investment firm ValueAct Capital has filed a Form 4 with the SEC regarding its stake in Microsoft (MSFT). 

Per the filing, ValueAct sold 7 million shares in total across August 4th, 7th, and 8th.  ValueAct sold at prices of $72.50 and $72.61.

The firm has also been selling down other positions in recent months as well.

Per Google Finance, Microsoft is "develops, licenses, and supports a range of software products, services and devices. The Company's segments include Productivity and Business Processes, Intelligent Cloud and More Personal Computing. The Company's products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; video games, and training and certification of computer system integrators and developers. It also designs, manufactures, and sells devices, including personal computers (PCs), tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories, that integrate with its cloud-based offerings. It offers an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and it provides solution support and consulting services."


Friday, August 4, 2017

Hedge Fund Links ~ 8/4/17


Excerpts from Highfields Capital's letter [Business Insider]

Steve Eisman says financial system 'safe' but worried about Europe's banks [Business Insider]

Thoughts from Dan Loeb on Third Point Re's conference call [CNBC]

Hedge funds turn to dark web to gain an edge [FnLondon]

Paul Tudor Jones clients pull 15% from main hedge fund [Bloomberg]

Fledgling quant funds seek to disrupt Wall Street [FT]


Pershing Square Builds Automatic Data Processing Stake

Recently, Bloomberg reported that Bill Ackman's activist firm Pershing Square Capital Management had built a stake in Automatic Data Processing (ADP).  Then today, Ackman told CNBC that he's "still buying the stock as of this morning" and that he is "not seeking control of the company."

Per Ackman's recent interview, he feels the company can expand profit margins by more than 50%.  Pershing now reportedly owns 8% of the company mainly via derivatives.

Apparently, Ackman was seeking to push back the board nomination window.  ADP responded: "The Board has unanimously determined that it is not in the best interests of ADP or its other shareholders to accede to Pershing Square's last-minute request for an extension."

ADP also appeared to take a dig at Pershing in its statement as well: "Since Carlos Rodriguez became CEO nearly six years ago, ADP's total shareholder return of 202% is well in excess of the S&P 500 TSR of 128% - and is many multiples of Pershing's TSR of 29%."

For more on this fund, we've also highlighted other recent portfolio activity from Pershing Square here.

Per Google Finance, Automatic Data Processing is "a provider of human capital management (HCM) solutions to employers, offering solutions to businesses of various sizes. The Company also provides business process outsourcing solutions. Its segments include Employer Services and Professional Employer Organization (PEO) Services. The Employer Services segment offers a range of human resources (HR) business process outsourcing and technology-enabled HCM solutions. These offerings include payroll services, benefits administration, talent management, HR management, time and attendance management, insurance services, retirement services, and tax and compliance services. ADP TotalSource, ADP's PEO business, offers small and mid-sized businesses a HR outsourcing solution through a co-employment model. As a PEO, ADP TotalSource provides HR management services while the client continues to direct the day-to-day job-related duties of the employees."


Thursday, August 3, 2017

Alex Roepers Interview With Capitalize For Kids

Alex Roepers of Atlantic Investment Management sat down with Capitalize For Kids for their Investor Series and talks about his strategy for beating the market while holding only six stocks.  Here's a few excerpts:


On the current markets:  "From a 40,000 foot level,you know the 10-year treasury yield is around 2.4%, while the S&P 500 dividend yield is around 2.1% and the earnings yield is about 5%, based on an index P/E of 17x. So we see the market as not overly cheap for sure but also not overly expensive. The continued low interest environment remains supportive for the overall market.

Within the market of course, you have many different pockets – it is a bit of a barbell, bifurcated market. On one hand, you have Tesla and the other story stocks that have a cult following and valuations that we think make absolutely no sense. On the other hand, you have many overlooked but solidly profitable companies who have little or no top-line growth, such as General Motors, automotive suppliers, airlines and retailers.We would say the market is full of interesting opportunities, long and short. It is ok on balance as long as rates remain reasonable."




On one of his top holdings Commscope (COMM): "(COMM is) a $5 billion integrated manufacturer of end-to-end solutions connecting wired and wireless networks, including networking equipment like antennas as well as coaxial and fiber optic cables. Solid secular growth is rooted in increased use of streaming data, video and movies and increased use of smart phones and internet mobility in general. Foreign sales are 50% and increasing due to growth in less mature markets, both developed and emerging, which require improved bandwidth and connectivity. We see it as a solid business. Key customers include Comcast, Verizon, AT&T,Charter Communications, Anixter and Liberty Media.

We started scaling into CommScope last October around $30/share. From there, the shares rallied to $42, up by 40% within 6 months. We were trimming along the way to keep the position in check as a percentage of capital. Then, in early May, due to a reduced forecast for Q2-2017, for reasons we deem to be transitory, Commscope shares were knocked down to $35, where we added back the shares we had sold on strength previously.  We see the shares reaching $50 in the next 6 to 12 months on reasonable earnings and valuation assumptions. Given our analysis CommScope has solid downside support here,compelling upside on its own and also takeover potential."



On overlooked value play Diebold Nixdorf (DBD): "They are a leading maker of automated teller machines (ATM) as well as electronic point-of-sale (EPOS) solutions for the retail market. In ATM’s, NCR and Hyosung are key competitors and in the retail vertical it is IBM-Toshiba and NCR mostly.  There are some 3.3 million ATMs installed worldwide, one third of which are Diebold Nixdorf’s.

A key concern is that the proliferation of electronic payments will cause a reduced need for the use of ATM’s. We believe that this concern is overblown as cash transactions and notes in circulation continue to grow even in the United States and Europe.  ATMs remain a productivity tool for banks and an integral part of their customer interaction.While there has been a lot of consolidation of bank branches, the total ATM count in mature markets has actually been stable and now we see the overall banking sector is improving which bodes well for new and upgraded ATMs. The installed base is an important barrier to entry and key driver of business.  About 60% of Diebold Nixdorf’s sales come from maintenance services and software.

In the past two years, Diebold shares had fallen from $40 down to the low twenties. Besides a recent earnings warning in what is “year one” of a transformational merger, another key reason behind the share price weakness was a spell of declining capital spending by banks. The transformational deal was to buy a key competitor called Wincor Nixdorf out of Germany. Wincor, which was sold by Siemens to private equity in 1999, and subsequently listed in2004, generates $2.5 billion in sales, $1.5 billion from ATMs and $1 billion from retail point of sale systems (POS) used by retailers like Ikea, Zara and H&M. The cross-border deal took a year before it closed in August of last year, during which NCR and others took advantage of the uncertainty and inability by the two merger companies to react.  We see significant potential from combining the complementary footprints and capabilities ...  we see Diebold Nixdorf shares reaching over $40/share in 18-24 months, based on 11-12x our 2020 EPS target."


He also gives updates on Harman (HAR) and Owens-Illinois (OI) and chats about other topics.  You can read the rest of the interview here.


Wednesday, August 2, 2017

What We're Reading ~ 8/2/17


Profile of the founders of payments company Stripe [Bloomberg]

Staying competitive as the world changes [Collaborative Fund]

The unreformed stock picker: profile of Bill Miller [Forbes] 

Investment case for Gilead Sciences [WertArt Capital]

Netflix has $20 billion in debt - can it keep borrowing its way to success? [LA Times]

Palantir, the 'special ops' tech giant that wields as much power as Google [The Guardian]

Craft beer, brought to you by Big Beer [NPR]

On the threat of European grocery discounters [FBIC Group]

Priceline: the world's largest online travel company [Economist]

Electric vehicle outlook [Bloomberg]

Mental models: how to train your brain to think in new ways [James Clear]

The best path to long-term change is slow, simple and boring [NYTimes]

The 4 keys to learning anything [Zen Habits]
 


Tuesday, August 1, 2017

Lone Pine Capital Starts TransUnion Position

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G with the SEC regarding shares of TransUnion (TRU).  Per the filing, Lone Pine now owns 5.1% of TRU with over 9.29 million shares.

This is a newly disclosed position for the hedge fund as they previously did not own it at the end of the first quarter.  The new filing was made due to activity on July 20th.

Per Google Finance, TransUnion is "a risk and information solutions provider to businesses and consumers. The Company provides consumer reports, risk scores, analytical services and decision capabilities to businesses. The Company operates through three segments: U.S. Information Services (USIS), International and Consumer Interactive. The USIS segment provides consumer reports, risk scores, analytical services and decisioning capabilities to businesses. The International segment provides services similar to its USIS segment to businesses in select regions outside the United States. The Consumer Interactive segment offers solutions that help consumers manage their personal finances and take precautions against identity theft. Businesses uses its solutions for their process workflows to assess consumer ability to pay for services, measure and manage debt portfolio risk, collect debt, verify consumer identities and investigate potential fraud."


Monday, July 31, 2017

Senator Investment Group Takes Hyatt Hotels Stake

Alex Klabin and Doug Silverman's hedge fund firm Senator Investment Group has filed a 13G with the SEC regarding shares of Hyatt Hotels (H).  Per the filing, Senator now owns 5.82% of Hyatt with over 2.28 million shares.

This is a newly disclosed equity stake for the firm as they previously did not own any shares as of the end of the first quarter.  The new filing was made due to activity on July 17th.

We've also highlighted other recent portfolio activity from Senator here.

Per Google Finance, Hyatt Hotels is "a global hospitality company. The Company develops, owns, operates, manages, franchises, licenses or provides services to a portfolio of properties. The Company operates through four segments: owned and leased hotels; Americas management and franchising (Americas); ASPAC management and franchising (ASPAC), and EAME/SW Asia management and franchising (EAME/SW Asia). The owned and leased hotels segment consists of its owned and leased full service and select service hotels. The Americas segment consists of its management and franchising of properties located in the United States, Latin America, Canada and the Caribbean. The ASPAC segment consists of its management and franchising of properties located in Southeast Asia, as well as China, Australia, South Korea, Japan and Micronesia. The EAME/SW Asia segment consists of its management and franchising of properties located in Europe, Africa, the Middle East, India, Central Asia and Nepal."


Tiger Global Shows Redfin Stake, Ups Apollo Stake Again

Chase Coleman's hedge fund firm Tiger Global has submitted a couple filings to the SEC.  Here are the details:

Tiger Global Shows Extent of Redfin Stake

Redfin just completed its initial public offering (IPO) under the ticker symbol RDFN.  Per a Form 3 filed with the SEC, Tiger Global already had a stake in the company from when it was private. 

They owned 1,852,943 Series B convertible preferred stock, 3,705,838 Series F convertible preferred stock, as well as 617,826 Series G convertible preferred stock.

Upon completion of the IPO, the convertible preferred stock will "automatically convert into common stock of the Issuer on a 1:1 basis" per the filing.

Per Google Finance, Redfin is "a United States-based real estate broker company. The Company provides real estate search and brokerage services. The customer can search for homes by neighborhood, city or MLS number, or can refine results using detailed parameters, such as price and number of beds or baths. The Company serves home buyers and sellers. Redfin Builder Services is its sales platform designed specifically for home builders and condominium developers. Redfin Builder Services support product analysis, digital marketing, media, listing management and sales, pricing, and reporting. The customer can search homes for sale in Austin, Atlanta, Baltimore, Boston, Charlotte, Chicago, Dallas, Denver, Fort Lauderdale, Houston, Lake Tahoe, Las Vegas, Los Angeles, Miami, New York, Philadelphia, Phoenix, Portland, OR, Raleigh, San Antonio, San Diego, San Francisco, Sacramento, San Jose, San Luis Obispo, Santa Barbara, Seattle, Washington, and West Palm Beach."


Tiger Global Ups Apollo Stake Again

As we've detailed in previous months, Tiger Global has been accumulating a position in private equity firm Apollo Global (APO).

Their latest just-filed Form 4 with the SEC indicates they purchased 3,200 more APO shares on July 25th at a weighted average price of $27.966 and also purchased 53,000 shares on July 26th at a weighted average price of $27.96.

After these latest purchases, Tiger Global's stake in APO is now over 33.45 million shares.

Per Google Finance, Apollo Global is "an alternative investment manager in private equity, credit and real estate. The Company raises, invests and manages funds on behalf of pension, endowment and sovereign wealth funds, as well as other institutional and individual investors. The Company's segments include private equity, credit and real estate. The private equity segment invests in control equity and related debt instruments, convertible securities and distressed debt investments. The credit segment invests in non-control corporate and structured debt instruments, including performing, stressed and distressed investments across the capital structure. The real estate segment invests in real estate equity for the acquisition and recapitalization of real estate assets, portfolios, platforms and operating companies, and real estate debt, including first mortgage and mezzanine loans, preferred equity and commercial mortgage backed securities."


JANA Partners Sends Letter to EQT's Board, Still Opposes Rice Transaction

Barry Rosenstein's activist hedge fund JANA Partners has filed an amended 13D with the SEC regarding its position in EQT (EQT).  Per the filing, JANA still owns 5.8% of the company with 10,017,129 shares (including options to purchase 1.86 million shares).


We highlighted previously that JANA opposed EQT's transaction with Rice Energy.  They continue to oppose it and JANA has sent a letter to EQT's board, which is embedded below:



You can also read it via the SEC's website here.



Friday, July 28, 2017

Capitalize For Kids Investors Conference 2017: Einhorn, Watsa, Chilton & More

The 2017 Capitalize For Kids Investors Conference is only a few months away in Toronto, Ontario.  It features top investment managers sharing their investment ideas while all proceeds are allocated to solving the toughest challenges in children's brain and mental health.

You can learn more about the conference and register at their website: https://www.capitalizeforkids.org/conference


Capitalize For Kids Conference Details

When: October 18th and 19th, 2017

Where:  Arcadian Court, Toronto, Ontario


2017 Speakers List

David Einhorn, Greenlight Capital

Richard Chilton, Chilton Investment Company

Prem Watsa, Fairfax Financial 

Aaron Cowen, Suvretta Capital

Jeffrey Smith, Starboard Value

Brad Dunkley and Blair Levinsky, Waratah Capital

Dan Dreyfus, 3G Capital

Samantha Greenberg, Margate Capital

Paul Hilal, Mantle Ridge

Ted Goldthorpe, BC Partners

James Keenan, BlackRock

Jeffrey Olin, Vision Capital

Brandon Osten, Venator Capital

David Blitzer, Blackstone

John Wilson, Sprott

Richard Pilosof and Mike Quinn, RP Investment Advisors

Youlia Rowland, Proxima Capital

Ajay Royan, Mithril Capital

Christian Lassonde, Impression Ventures


This is a high quality event and basically has become Canada's pre-eminent investment conference.  And as you can see above, it features some quality speakers.  Hear their latest investment ideas and benefit charity at the same time.

The conference is already 60% sold out, so hurry before it's too late.  More than 400 pension plans, family offices, and buy-side investors will be in attendance.

You can register for the conference by clicking here.

Embedded below is the flyer for the event:





Hedge Fund Links ~ 7/28/17


Baupost's Jim Mooney warns of potential trigger for next crisis [Business Insider]

Paulson winds down long/short fund amid strategy refocus [Bloomberg]

Would you invest with Steven Cohen? [Institutional Investor]

Activist hedge funds pull hard on the M&A lever [Reuters]

Wealthy investors are leaving hedge funds for real estate [Bloomberg]

Loophole closed: hedge fund managers prepare huge tax checks [WSJ]


Eminence Capital Boosts CyberArk Software Stake

Ricky Sandler's hedge fund firm Eminence Capital has filed a 13G with the SEC regarding shares of CyberArk Software (CYBR). Per the filing, Eminence now owns 5.4% of the company with over 1.88 million shares.

This is an increase of 1.47 million shares since the end of the first quarter when they previously owned 415,460 shares. The latest filing was due to activity on July 14th.

You can view other recent portfolio activity from Eminence Capital here.

Per Google Finance, CyberArk Software is "an Israel-based provider of information technology (IT) security solutions that protects organizations from cyber-attacks. The Company's software solutions are focused on protecting privileged accounts, which have become a critical target in the lifecycle of cyber-attacks. The Company's Privileged Account Security Solution consists of various products, such as Shares Technology Platform, Enterprise Password Vault, SSH Key Manager, Privileged Session Manager, Privileged Threat Analytics, Application Identity Manager, CyberArk-Conjur, Endpoint Privilege Manager and On-Demand Privileges Manager. The Company's products provide protection against external and internal cyber threats and enables detection and neutralization of attacks. The Company's Enterprise Password Vault provides customers with a tool to manage and protect all privileged accounts across an entire organization, including physical, virtual or cloud-based assets."


Wednesday, July 26, 2017

Third Point Q2 Letter: Re-enters Alibaba, Adds BlackRock Stake

Dan Loeb's hedge fund firm Third Point was up 4.6% for the second quarter and is up 10.7% for the year.  Third Point's second quarter letter reveals they've re-entered Alibaba (BABA).  They feel now is the time to re-enter due to the company's launch of personalized advertising, new ad tech for brand advertisers, as well as revenue potential from higher ad loads, among other reasons.

Backing out net cash and some other stakes, Loeb's firm feels Alibaba's core business alone is worth $121 per share (around 15x their 2019 EPS estimate of $8.20) with earnings growing 30% year-on-year.  They feel BABA can close the valuation gap with competitors like Tencent, which trades at 32x consensus 2018 EPS.

Third Point also reveals a stake in BlackRock (BLK) in the letter.  Rather than simply being an asset manager. they feel it's "becoming a network or index-like business, with earnings power driven by ETFs (via iShares) and data & analytic services (via Aladdin).  They point out they're basically oligopoly businesses.

Also, a few months ago we highlighted how this hedge fund has gone activist on Nestle and we posted Third Point's letter on Nestle here.

Embedded below is Third Point's Q2 2017 letter:



You can download a .pdf copy here.

For other recent hedge fund letters, you can also read Greenlight Capital's Q2 letter here.


Howard Marks' Cautionary New Memo on Cycles: "There They Go Again... Again"

Oaktree Capital Chairman Howard Marks is out with a new memo.  It's entitled "There They Go Again... Again."  He notes that, "Some of the memos I'm happiest about having written came at times when bullish trends went too far, risk aversion disappeared and bubbles inflated."  He feels that it's time again for a cautionary memo.

His latest writings delve into the topics of cycles and what seeds are needed for the foundation of a bull market, boom or bubble.  He outlines how investors gradually shift from a benign environment, to one with more money than ideas, to suspension of disbelief, to rejection of valuation norms, to eventually the almighty "fear of missing out."

While Marks says many of the ingredients are in play today, a few usual ingredients are notably missing.  He also writes that, "Most people can't think of what might cause trouble anytime soon.  But it's precisely when people can't see what it is that could make things turn down that risk is highest, since they tend not to price in risks they can't see."

This is an excellent memo and worth reading in its entirety.

Embedded below is Oaktree Capital and Howard Marks' new memo: There They Go Again... Again:



You can download a .pdf copy here.

For more letters from prominent investors, we've recently posted Third Point's Q2 letter and Greenlight Capital's Q2 letter.


What We're Reading ~ 7/26/17


The most important moat [Base Hit Investing]

Technical Analysis of Financial Markets [John Murphy]

Ferrari (RACE) sells veblen goods, not cars [Intrinsic Investing]

Buy time, they're not making any more of it [Abnormal Returns]

On reinvestment moats and Zooplus [Connor Leonard]

On perceived versus real risk tolerance [Aleph Blog]

On why it's so hard to be a contrarian investor [Medium]

A Hermes Birkin bag generates higher return than stocks? [BagHunter]

Snapchat (SNAP) isn't a social network, it's a toy [Vanity Fair]

Can anyone bury Bloomberg? [Institutional Investor]


Monday, July 24, 2017

Tiger Global Adds To Apollo Stake

Chase Coleman's hedge fund firm Tiger Global has filed a Form 4 with the SEC regarding its stake in Apollo Global Management (APO).  Per the filing, Tiger Global acquired 100,916 shares of APO on July 19th at a weighted average price of $27.357.

They also bought 149,052 shares on July 20th at a weighted average price of $27.897.  After these buys, Tiger Global now owns over 33.13 million shares.  As we've detailed previously, Tiger Global has been accumulating Apollo Global shares throughout the past few months.

Per Google Finance, Apollo Global Management is "an alternative investment manager in private equity, credit and real estate. The Company raises, invests and manages funds on behalf of pension, endowment and sovereign wealth funds, as well as other institutional and individual investors. The Company's segments include private equity, credit and real estate. The private equity segment invests in control equity and related debt instruments, convertible securities and distressed debt investments. The credit segment invests in non-control corporate and structured debt instruments, including performing, stressed and distressed investments across the capital structure. The real estate segment invests in real estate equity for the acquisition and recapitalization of real estate assets, portfolios, platforms and operating companies, and real estate debt, including first mortgage and mezzanine loans, preferred equity and commercial mortgage backed securities."

For more on this hedge fund, you can view additional recent portfolio activity from Tiger Global here.


Fairholme Capital Increases St. Joe Position

Bruce Berkowitz's investment firm Fairholme Capital has filed an amended 13D with the SEC regarding its position in St. Joe (JOE).  Per the filing, Fairholme now owns 36.1% of the company with over 25.47 million shares.

This is an increase from the 25.1 million shares they owned at the end of May per a previously filed form 13D.

The filing notes that Berkowitz was buying JOE shares in late May, and early-to-mid June at prices ranging from $17.2483 to $17.8468.

You can view previous portfolio activity from Fairholme here.

Per Google Finance, St. Joe is "a real estate development, asset management and operating company. The Company operates through five segments: residential real estate; commercial real estate; resorts and leisure; leasing operations, and forestry. Its residential real estate segment plans and develops primary residential and resort residential communities of various sizes on its existing land. Its commercial real estate segment plans, develops, manages and sells real estate. Resorts and leisure segment features a portfolio of vacation rentals and hotel operations, as well as golf courses, a beach club, marinas and other related resort amenities. Its leasing operations business includes its retail and commercial leasing. Its forestry segment focuses on the management of its timber holdings in Northwest Florida."


Paulson & Co Trims Trilogy Metals Stake

John Paulson's hedge fund firm Paulson & Co has filed a Form 4 with the SEC regarding its stake in Trilogy Metals (TMQ).  Per the filing, Paulson sold 18,247 shares on June 8th at a price of $0.5985.  After this sale, they still own over 11.56 million shares of TMQ.

For more from this fund, head to other recent portfolio activity from Paulson & Co.

Per Google Finance, Trilogy Metals is "formerly NovaCopper Inc., is a Canada-based base metals exploration company. The Company focuses on exploring and developing its mineral holdings in the Ambler mining district located in Alaska, the United States. The Company's principal assets, the Upper Kobuk Mineral Projects (UKMP or UKMP Projects), are located in the Ambler mining district in Northwest Alaska. The Company's UKMP Projects include approximately 352,943 acres consisting of the Ambler and Bornite lands. The Ambler lands hosts the Arctic copper-zinc-lead-gold-silver Project and other mineralized targets within a 100-kilometer long volcanogenic massive sulfide belt. The Amber lands are located in Northwestern Alaska and consist of over 112,050 acres of Federal patented mining claims and State of Alaska mining claims. The Bornite deposit is located approximately 25 kilometers southwest of its Arctic deposit. The Bornite lands hosts the Bornite carbonate-hosted copper Project."


Friday, July 21, 2017

Professional Web Design Package For Investment Firms: First 10 Responders Receive Discount

Our friends at Board Studios have put together a web design package exclusively for Market Folly readers that we wanted to share because they do great work and we thought it would be of interest to many of you.  Reach out to their founder to receive the discount at kosta@boardstudios.com or 347-871-4453.

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They've been extremely generous to offer this discount so if you're looking for a new website or refresh, reach out to Board Studios' founder at: kosta@boardstudios.com or give him a call at 347-871-4453


Thursday, July 20, 2017

JANA Partners Exits Whole Foods Market Stake

Barry Rosenstein's hedge fund firm JANA Partners has filed an amended 13D with the SEC regarding shares of Whole Foods Market (WFM).  Per the filing, JANA Partners has sold its entire position as of July 17th. 

As an activist investor, JANA Pushed Whole Foods to sell itself and the company recently agreed to a deal with Amazon (AMZN).  Instead of sitting around in a merger arbitrage trade, it looks like JANA has decided to move on to its next opportunity.

For more on this firm, we've highlighted a stock JANA Partners recently bought here.

Per Google Finance, Whole Foods is "is engaged in the business of natural and organic foods supermarket. The Company operates approximately 456 stores in the United States, Canada and the United Kingdom. Its stores have an average size of approximately 39,000 square feet, and are supported by its distribution centers, bake house facilities, commissary kitchens, seafood-processing facilities, a produce procurement center, and a specialty coffee and tea procurement and roasting operation, among others. It offers over 30,000 organic stock keeping units (SKUs), covering various areas of its store, including produce, packaged goods, bulk, frozen, dairy, meat, bakery, prepared foods, coffee, tea, beer, wine, cheese, nutritional supplements, vitamins, body care, pet foods and household goods. The Company's brands include 365 Everyday Value, Allegro Coffee, Whole Foods Market, Whole Paws, and Engine 2 Plant-Strong. It also offers approximately 400 temporary exclusives."


Corvex Management Adds To Energen Position

Keith Meister's activist firm Corvex Management has filed an amended 13D regarding shares of Energen (EGN). Per the filing, Corvex now owns 8.8% of the company with over 8.51 million shares.

This is an increase of over 1.1 million shares since late June when Corvex was previously buying EGN.  The filing notes they were buying in early July and as recent as July 19th. They bought between $47.11 and $50.57.

Corvex's stake is actually comprised of 8.1 million shares of common stock and various stock options. They have 415,200 shares underlying call options that have an exercise price of $50 and expiration of October 20, 2017. They've also sold the same amount of call options with an exercise price of $60 and the same expiration in October. Also, they've sold the same amount of put options with an exercise price of $40 and expiration of January 19, 2018.

For more on this fund, we've highlighted how Corvex has bought another stock recently.

Per Google Finance, Energen is "an oil and natural gas exploration and production company. The Company is engaged in the exploration, development and production of oil and natural gas properties and natural gas. Its operations are conducted through subsidiary, Energen Resources Corporation and occur within the Midland Basin, the Delaware Basin and the Central Basin Platform areas of the Permian Basin in west Texas and New Mexico. The Company is focused on increasing its oil, natural gas liquids and natural gas production and proved reserves through active development and/or exploratory programs in the Permian Basin. As of December 31, 2016, oil, natural gas liquids and natural gas represented approximately 60%, 20% and 20% of its reserves. As of December 31, 2016, its development activities added approximately 327 million barrels of oil equivalent (MMBOE) of reserves from the drilling of 623 gross development, exploratory and service wells and 73 well recompletions and pay-adds."


ValueAct Capital Cuts Bioverativ Stake

Jeff Ubben's activist investment firm ValueAct Capital has filed an amended 13D with the SEC regarding its position in Bioverativ (BIVV).  Per the filing, ValueAct now owns 3.8% of the company with just over 4 million shares.

This is a decrease from the previous 8.4 million shares that they previously owned at the end of the first quarter of 2017.  The latest filing shows ValueAct sold over 4.68 million shares from June 19th through July 13th at prices ranging from $59.70 to $62.56.

We've also highlighted another stock ValueAct has been selling here.

Per Google Finance, Bioverativ is "a biotechnology company. The Company is focused on the discovery, research, development and commercialization of therapies for the treatment of hemophilia and other blood disorders. It markets approximately two products, including ELOCTATE [Antihemophilic Factor (Recombinant), Fc Fusion Protein], and ALPROLIX [Coagulation Factor IX (Recombinant), Fc Fusion Protein], extended half-life clotting-factor therapies for the treatment of hemophilia A and hemophilia B, respectively. ELOCTATE and ALPROLIX use a process known as Fc fusion to link recombinant factor VIII and factor IX, respectively, to a protein fragment in the body known as Fc. The fusion of the factor with the Fc protein fragment uses a naturally occurring pathway and is designed to extend the half-life of the factor thereby making the product last longer in a person's blood than various factor therapies. Its pipeline includes BIVV 001(rFVIIIFc-VWF-XTEN) and BIVV 002 (rFIXFc-XTEN)."


Wednesday, July 19, 2017

What We're Reading ~ 7/19/17


How do you value a subscription business? [25iq]

The logic of patience [Value Investor India]

A look at BOFI Federal Savings: Annals of the Bank of Misery [SIRF]

On the struggles of shopping malls part 1 and part 2 [Adventures in Capitalism]

America's venerable food brands are struggling [WSJ]

Inside Formula One's (FWONK) race for world domination [FT]

A look at Liberty Braves Group (BATRA) [Yet Another Value Blog]

A new record high for US consumer debt [WSJ]

This telecom bet big on landlines and lost [WSJ]

Qatar: the global empire of a tiny country [Amrank]

10 years after the last bull began to fail, this market shows fewer signs of trouble [CNBC]

The personality trait that massively improves decision making [Inc]

This guilt-free ice cream is a cult hit, thanks to Instagram [Bloomberg]


Monday, July 17, 2017

Greenlight Capital Q2 Letter: New Toshiba Position

David Einhorn's hedge fund firm Greenlight Capital is out with its second quarter letter.  During the quarter, they lost 4% and thus far for the year are down 2.8% net.  Their average exposure was 111% long and 79% short.

Their five largest longs in alphabetical order are: AerCap (AER), Bayer (Germany: BAYN), CONSOL Energy (CNX), General Motors (GM), and Mylan (MYL).

They also point out short positions in their 'bubble basket' include Amazon (AMZN), athenahealth (ATHN), Netflix (NFLX), and Tesla (TSLA) that have moved against them.

The letter walks through some of their thoughts on each.  While Greenlight is long one auto manufacturer (GM) and short another one via Tesla, they don't do pair trades.

Also, the letter highlights that Greenlight started a new long in Toshiba (Japan: 6502) and outlines their thesis there.

Lastly, they also note they've sold their longs in Altice and Time Warner (TWX), as well as covered their decade-long short position in the credit rating agencies and their short of Mallinckrodt (MNK).

Embedded below is Greenlight Capital's Q2 letter:

 

For more from this manager, be sure to check out Einhorn's presentation on shorting Core Labs.


Whitney Tilson's Presentation on Alphabet and Facebook

Whitney Tilson of Kase Capital Management gave a presentation at the 14th annual Value Investing Seminar in Italy on two stocks: Alphabet (GOOG) and Facebook (FB).

Tilson starts by doing a bit of a post-mortem on a call he made against Google some time ago. He points out that the company enjoys a flywheel of network effects and economies of scale: large user base > large advertiser base > better monetization > most R&D dollars > best product > high barriers to entry.


That's obviously not anything new, but he points out that valuation isn't crazy at 28x 2017 EPS and 13x EBITDA estimates given that the vast majority of incremental ad spending is ending up on GOOG or Facebook's platforms.  And if you back out GOOG's cash ($126 per share) and 'other bets' ($50 per share), you get a valuation much more in line with the S&P for a company that he says is "vastly superior" to the average corporation.

On Facebook (FB), Tilson points out the company has higher margins than GOOG, and revenue growth is higher as well.

Embedded below is Tilson's presentation on GOOG and FB:



You can download a .pdf copy here.


Peter Lynch on How to Pick Stocks

Legendary investor Peter Lynch once gave a talk on how to pick stocks from "The Stock Shop" and goes over basic concepts like time horizon, your advantages for stock picking, types of companies, hidden assets, risk factors, etc. 

He previously managed the Magellan Fund and between 1977 and 1990 returned an average of 29% annually.  He's also the author of the famous investing book One Up On Wall Street.

Embedded below is the video of Peter Lynch on how to pick stocks:



For more from this investor, we've also previously posted about Peter Lynch on using your edge: timeless advice for investors.


Friday, July 14, 2017

Hedge Fund Links ~ 7/14/17


Bridgewater's Ray Dalio says 'keep dancing' but party ending soon [CNBC]

Ex-Viking CIO Sundheim plans to start equity hedge fund [Bloomberg]

Tourbillon's Jason Karp: this market doesn't make any sense [Business Insider]

Robert Soros stepping down from Soros Fund to start his own [Business Insider]

Insurance dedicated funds: the hot new way to avoid taxes [Bloomberg]

Hedge funds makes the case for humans over AI [Bloomberg]

The book tour approach to launching a hedge fund [All About Alpha]

The last hedge fund pit bull [Institutional Investor]

Investing pioneer Jay Regan on hedge funds, fees and competitive markets [Collaborative Fund]


Thursday, July 13, 2017

2 Non-Consensus Stock Reports From Boyar Research

Boyar Research recently profiled two companies that are currently very much out of favor in the investment community. Western Union (WU) is the second most shorted stock in the S&P 500 and Discovery Communications (DISCK) has 28 analysts covering it with only 3 buy ratings.

To receive Boyar’s complimentary full-length report on both of these companies, please click here.

For over forty years, Boyar Research has been providing profitable non-consensus stock picks to their subscribers. They have demonstrated time and again that they are not afraid of challenging popular opinion or providing their clients with a profitable contrarian perspective, from profiling financial companies in 1987, when they sold at a significant discount to the rest of the market; to advocating purchasing drug company shares in 1993 after the S&P drug group lost nearly 40% of its value due to fears over “Hillarycare”; to being bullish on U.S. housing-related stocks in 2011."


To receive their complimentary full-length reports on both Western Union and Discovery Communications, please click here.


So what attracts Boyar to Western Union, which has 14% of its shares sold short?

-  WU’s rapidly growing digital money transfer business, WU.com, could single-handedly lift the Company’s EPS growth to 10%-13% by 2020, from flattish today. WU.com is a hidden asset within WU. Using conservative assumptions, they estimate that WU.com will account for 27% of Western Union’s enterprise value in 2020, up from 11% in 2016.

-  Recent precedent transactions—namely, PayPal’s takeover of Xoom, the #2 digital money transfer provider, and the bidding war for MoneyGram, the #2 global retail C2C money transfer provider—highlight WU as substantially undervalued. Moreover, WU is the #1 player in both of these businesses.

-  Applying a 3.5x revenue multiple to WU.com, which is a discount to Xoom’s 4.8x revenue takeover multiple, and 15x EV/FCF to WU’s remaining businesses (retail C2C, C2B, and B2B), which is a substantial discount to MoneyGram’s 21x EV/FCF takeover valuation, they derive an intrinsic value estimate of ~$33 per share for WU at the end of 2020, offering ~72% upside, or a 3.5-year IRR of ~20% including the dividend (3.7% current yield).

To receive Boyar’s Western Union report, please click here.



Why does Boyar Research like Discovery Communications despite the consensus view that traditional cable companies are secularly challenged?

-  Following a number of key affiliate fee renewals in both U.S. and international markets, DISCK has significant revenue and cash flow visibility. Notably, international affiliate fee revenues are expected to increase at a low-double-digit percentage rate over the next few years.

-  A host of potential growth opportunities should favorably impact Discovery’s future results, including increased consumer adoption of Discovery GO (streaming content); further traction with various subscription-based initiatives, including the Eurosport Player; and increased pay-TV penetration in key international markets.

-  Since 2010, DISCK has deployed $8 billion toward buybacks (~50% of its current market cap)—reducing diluted shares outstanding by over 30%—including $1.4 billion utilized in 2016 to repurchase ~53 million shares at an average cost of ~$26 a share. They expect share repurchases to be a recurring theme as a result of the Company’s strong revenue and cash flow visibility, coupled with DISCK’s currently depressed share price and attractive valuation.

-  Applying discounted multiples (relative to precedent industry transactions) of 10.0x and 9.0x our 2019E EBITDA for the U.S. and International Networks segments, respectively, they derive an estimate of intrinsic value of $47 a share, representing over 80% upside from current levels. They also believe Discovery represents an attractive acquisition target.


To receive Boyar's Discovery Communications report, please click here.


Wednesday, July 12, 2017

Viking Global Trims Rice Energy & EnCana; Adds to Calithera Biosciences

Andreas Halvorsen's hedge fund firm Viking Global has just filed three separate 13G's with the SEC. 

Viking Global Trims Rice Energy Stake

First, Viking has disclosed that they now own 5.8% of Rice Energy (RICE) with 12 million shares.

This is a decrease of over 5.45 million shares as they previously owned 17.57 million shares at the end of the first quarter.  The filing was made due to activity on July 1st.

Rice recently received a takeover offer from EQT (EQT) and we highlighted how JANA Partners opposes the transaction.

Per Google Finance, Rice Energy is "an independent natural gas and oil company. The Company is engaged in the acquisition, exploration and development of natural gas, oil and natural gas liquids (NGL) properties in the Appalachian Basin. The Company conducts its operations through two segments: Exploration and Production, and Midstream. The Exploration and Production segment is engaged in the acquisition, exploration and development of natural gas, oil and NGLs. The Exploration and Production segment operates in the cores of the Marcellus and Utica Shales. The Company controls approximately 231,000 net acres in the Marcellus and Ohio Utica Shale cores. It operates approximately 1,164 drilling locations. The Midstream segment is engaged in the gathering and compression of natural gas, oil and NGL production of, and in the provision of water services to support the well completion activities of, Rice Energy and third parties."


Halvorsen's Firm Reduces EnCana Position

Second, Viking has also disclosed they now own 7.5% of EnCana (ECA) with 72.77 million shares. 

This is a decrease of 6.53 million shares as they previously owned 79.3 million shares at the end of the first quarter.  The filing was due to activity on July 1st.

Per Google Finance, EnCana is "an energy producer that is focused on developing its multi-basin portfolio of natural gas, oil and natural gas liquids (NGLs) producing plays. The Company's operations also include the marketing of natural gas, oil and NGLs. All of its reserves and production are located in North America. It operates through three segments: Canadian Operations, USA Operations and Market optimization. Its Canadian Operations segment includes the exploration for, development of, and production of natural gas oil and NGLs and other related activities within Canada. Its Canadian operations include Montney in northeast British Columbia and northwest Alberta and Duvernay in west central Alberta. The USA Operations include the exploration for, development of, and production of natural gas, oil and NGLs, and other related activities within the United States. The Market Optimization activities are primarily responsible for the sale of the Company's production to third party customers."


Viking Adds To Calithera Biosciences

Third, Halvorsen's firm also disclosed they now own 6.9% of Calithera Bioscience (CALA) with 2.42 million shares.

This is an increase of 114,706 shares since the end of the first quarter.  The filing was made due to activity on July 1st.

Per Google Finance, Calithera Bioscience is "a clinical-stage pharmaceutical company. The Company focuses on discovering and developing small molecule drugs directed against tumor and immune cell targets that control key metabolic pathways in the tumor microenvironment. It is engaged in developing agents that take advantage of the metabolic requirements of tumor cells and cancer-fighting immune cells, such as cytotoxic T-cells. The Company's lead product candidate, CB-839, is a critical enzyme in tumor cells. Its other product candidate, CB-1158, is being developed for hematology and oncology indications. CB-1158 is a potent and selective orally bioavailable inhibitor of the enzyme arginase. CB-839 is a selective, reversible and orally bioavailable inhibitor of human glutaminase. CB-1158 has single agent anti-tumor activity in syngeneic mouse tumor models that has been demonstrated to act through an immune mechanism. CB-1158 is being tested in a Phase I clinical trial in patients with solid tumors."


Eminence Capital Boosts Cornerstone OnDemand Stake

Ricky Sandler's hedge fund firm Eminence Capital has filed a 13G with the SEC regarding shares of Cornerstone OnDemand (CSOD).  Per the filing, Eminence now owns 5.4% of the company with over 3 million shares.

This is an increase of 714,564 shares since the end of the first quarter when they owned 2.34 million shares.  The filing was made due to activity on June 29th.

Per Google Finance, Cornerstone OnDemand is "a cloud computing company. The Company provides learning and human capital management software, delivered as Software-as-a-Service (SaaS). Its human capital management platform combines the talent management solutions with analytics and human resources (HR) administration solutions to enable organizations to manage the employee lifecycle. Its enterprise human capital management platform consists of four product suites: its Recruiting suite, which helps organizations to source and attract candidates, assess and select applicants, onboard new hires and manage the entire recruiting process; its Learning suite, which enables clients to manage training and development programs; its Performance suite, which provides tools to manage goal setting, performance reviews, compensation management and succession planning, and HR Administration suite, which supports employee records administration, workforce planning and compliance reporting."


Pershing Square Trims Restaurant Brands Stake: Report

CNBC is reporting that Bill Ackman's activist firm Pershing Square Capital Management has sold $610 million worth of Restaurant Brands (QSR) in a block trade, selling 10 million shares at $61 per share.

After this trade, Pershing would still own 29 million shares of QSR using the latest figures from their first quarter 13F filing.  While QSR was previously Ackman's top holding, this sale means there's potential for it to slip down a spot to his second largest holding, behind Air Products (APD).

For more on this hedge fund, check out Pershing Square's Q1 letter here.

Per Google Finance, Restaurant Brands is "a quick service restaurant (QSR) company. The Company had over 20,000 restaurants in more than 100 countries and the United States territories, as of December 31, 2016. It operates through two segments: Tim Hortons (TH) and Burger King (BK). Tim Hortons restaurants are quick service restaurants with a menu that includes blend coffee, tea, espresso-based hot and cold specialty drinks, baked goods, including donuts, Timbits, bagels, muffins, cookies and pastries, grilled paninis, classic sandwiches, wraps and soups, among others. Burger King restaurants are quick service restaurants that feature flame-grilled hamburgers, chicken and other specialty sandwiches, French fries, soft drinks and other food items. The Company operates coffee roasting facilities in Hamilton, Ontario and Rochester, New York. The Company sells its raw materials and supplies, including coffee, sugar, paper goods and other restaurant supplies to Tim Hortons restaurants."



Thursday, July 6, 2017

What We're Reading ~ 7/6/17


A look at Trupanion (TRUP) - a long-term compounder [Variant Views]

Jim Chanos: US economy is worse than you think [INET Economics]

A chat with Peter Bernstein [Jason Zweig]

Bob Rodriguez: We're witnessing development of "perfect storm" [Advisor Perspectives]

A skeptic's view of popular stocks [Barrons]

Bruce Berkowitz seeks return to glory by betting on Sears (SHLD) [WSJ]

Stockpicking is dying because there are no more stocks to pick [WSJ]

Surveying the direct to consumer landscape [Medium]

Tencent rules China; the problem is the rest of the world [Bloomberg]

A pitch on Cars.com (CARS) [Barrons]

Habits of people who know how to bring out the best in others [Fast Company]


Wednesday, July 5, 2017

JANA Partners Starts EQT Stake, Opposes Rice Transaction

Barry Rosenstein's activist hedge fund firm JANA Partners has filed a 13D on shares of EQT (EQT).  Per the filing, JANA now owns 5.8% of EQT with over 10.13 million shares (inclusive of options to purchase 1.86 million shares).

This is a newly disclosed equity position  for JANA. They purchased shares in April, May and June at prices ranging from $53.xx to $60.xx.

JANA's Letter to EQT Board

Rosenstein's firm also sent a letter to the board of directions and say they invested because "we believe that the Company trades at a substantial discount to its intrinsic value and has a ready opportunity to unleash this value potential by immediately separating its E&P and midstream businesses into two separate companies, which we estimate could create as much as $4.5 billion (or $26 per share) of value for EQT shareholders."

Additionally, they lay out their case as to why they are against the company's acquisition of Rice Energy.

Embedded below is JANA's letter to EQT:



If you overlaid this position on JANA's portfolio as of the end of the first quarter, EQT would be their second largest position, behind only Whole Foods (WFM).

You can view other recent portfolio activity from JANA Partners here.


Warren Buffett Interview With PBS

Berkshire Hathaway's Warren Buffett recently sat down with Judy Woodruff of PBS for an interview on a wide range of topics like the economy, income inequality, taxes and more.

Here's the video of part 1 of the interview:



And here's the video of part 2 of the interview:



For more on Buffett, we've also highlighted some recent buying activity from Berkshire Hathaway.


Tiger Management Shows Ooma Position

Julian Robertson's hedge fund firm Tiger Management has filed a 13G with the SEC regarding shares of Ooma (OOMA).  Per the filing, Tiger now owns 6.7% of OOMA with 1.22 million shares.

This is a newly disclosed equity position for the fund and the filing was made due to activity on June 21st.

You can view other recent portfolio activity from Tiger Management here.

Per Google Finance, Ooma is "a communications platform for small businesses and consumers. Ooma serves as a communications hub, which offers cloud-based telephony, Internet security, home monitoring and other connected services. Ooma combines PureVoice high definition (HD) call quality features with mobile applications anytime, anywhere calling. Ooma is a full router capable of prioritizing voice data and directing traffic to ensure reliable phone service. Its enterprise-grade phone service built for small business includes features, such as calling features, including unlimited calling in United States and Canada, 911 service and toll-free numbers available; office features, including virtual receptionist, extension dialing and voicemail; mobility features, including call forwarding, voicemail forwarding and multi-ring, and one-touch Internet protocol (IP) phone features, including three way conference, transfer calls and call on hold."


Wednesday, June 28, 2017

Mohnish Pabrai's Recommended Reading List

Investor Mohnish Pabrai recently recommended a few books at his talk at Google which we just highlighted.


Mohnish Pabrai's Recommended Reading List

  Am I Being Too Subtle? by Sam Zell.  Pabrai said it was great and personally preferred to listen to the audiobook.


  Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger by Janet Lowe. The other biography on Charlie Munger that Pabrai said included interesting tidbits not seen before.


  The Beak of the Finch: A Story of Evolution in Our Time by Jonathan Weiner.  Mohnish said he was fascinated by it.  "Unrelated to investing but a great read."


And in the past, Pabrai has also frequently recommended books such as:

  Poor Charlie's Almanack by Charlie Munger.  The classic text that any follower of his should read.


  The Essays of Warren Buffett by Warren Buffett.  Another classic.


And while he didn't recommend his own book, it's worth noting Pabrai has authored The Dhando Investor: The Low-Risk Value Method to High Returns.


For more book recommendations from top investors check out the right sidebar of Market Folly as we've posted many lists.


Mohnish Pabrai's Talk at Google on Entrenched Biases

Fund manager Mohnish Pabrai recently gave a talk at Google on how intensive stock research can be injurious to financial health. 

The video's description is "how the plethora of deeply entrenched biases and flawed evolutionary brain wiring makes us prone to make plenty of mistakes when picking stocks.  Specifically, the more time we spend analyzing a given business, the more likely we are to like it and invest in it. 

But if we don't spend time studying a business, how are we expected to understand its prospects and likely future?  This strong commitment bias is an important reason why most investment managers have trouble beating the index. 

Mohnish will lay out the origins of this bias problem and a few hacks to get around it."

Embedded below is the video of Mohnish Pabrai's latest talk at Google:



For more from this investor, we've posted Pabrai's talk on value investing as well.

For other investor talks at Google, we've posted many of those presentations and you can scroll through that link.


What We're Reading ~ 6/28/17


Taking the pulse of Disney's behemoth ESPN [Sports Business Daily]

The end of car ownership [WSJ]

Pitch on Bank of the Ozarks [Barrons]

Five ways a company can keep its competitive edge [Fortune]

Morningstar's updated top 10 holdings of ultimate stock pickers [Morningstar]

Half of Americans are spending their entire paycheck (or more) [CNN Money]

'How many jobs will be killed by A.I.?' is the wrong question [LinkedIn]

Inside the secret world of the shipping industry [Longreads]

Compound interest applied to learning [Kottke]

How to predict if a borrower will pay you back [NYMag]


Charlie Munger on The Psychology of Human Misjudgement

Investor Charlie Munger is well known for delivering his talk on The Psychology of Human Misjudgement at Harvard in 1995. 

A company called Tiny has created an animated and abridged version of the speech that hits the highlights and puts a visual twist on the talk.  So if you missed his talk or are looking for a quick refresh, this is a great synopsis. 

Embedded below is the video of Charlie Munger on the Psychology of Human Misjudgement:



For more on this investor, check out Charlie Munger's recommended reading list.


Tuesday, June 27, 2017

Steadfast Capital Boosts Trivago Position

Robert Pitts Jr.'s hedge fund firm Steadfast Capital has filed a 13G with the SEC regarding shares of Trivago (TRVG).  Per the filing, Steadfast now owns 5.4% of the company with over 1.60 million shares.

This is an increase of over 1.05 million shares since the end of the first quarter when they owned 550,074 shares.  The filing was made due to activity on June 14th.

We've previously highlighted how Foxhaven Asset Management has also built a Trivago stake

Per Google Finance, Trivago "operates an online hotel search platform. The platform allows users to search for, compare and book hotels. It gathers information from various third parties' platforms and provides information about the hotel, pictures, ratings, reviews and filters, such as price, location and extra options. The Company offers access to approximately 1.3 million hotels in over 190 countries via more than 50 localized websites and applications in various languages. The Company also offers marketing tools and services to hotels and hotel chains, as well as to online travel agencies and advertisers, among others. Its principal executive offices are located in Germany."