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 (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."