Friday, March 16, 2018

TCI Fund Goes Activist on Altaba, Calls For Liquidation

Sir Christopher Hohn's investment firm TCI Fund Management has filed a 13D with the SEC regarding its position in Altaba (AABA).  They now own 9.7% of the company with 79.77 million shares.

They've been slowly selling shares throughout the first three months of the year, presumably to stay below the 10% ownership cap as AABA has been buying back stock.

TCI Goes Activist on Altaba

The big development here, is that they've converted their 13G into a 13D and gone activist.  They're calling for a liquidation of the company, which owns big stakes in Alibaba (BABA) and Yahoo Japan.

Hohn sent a letter to Altaba, detailed below:

"As you know TCI is the largest shareholder of Altaba owning close to 10% of the company. We have very much appreciated your efforts to create shareholder value. We fully agree with your explicit goal of narrowing the wide discount to net asset value at which Altaba continues to trade.However, we believe that the current strategy of Altaba is unlikely to materially reduce this discount. A clear plan of liquidation is now necessary. This should involve a complete distribution or sale of all of Altaba’s Alibaba and Yahoo Japan shares.We attach a presentation for the Board and shareholders of Altaba laying out in summary our proposed plan of liquidation. We strongly believe that the vast majority of Altaba’s shareholders would be supportive of this plan.We have today converted our SEC filing to a 13D so that we may engage actively with you, the Board of Altaba and all shareholders to create the best outcome for all parties. We look forward to engaging with you constructively as you consider our proposal."

TCI's Presentation on Altaba

Hohn's firm also published a presentation on AABA and we've embedded it below.

Hedge Fund Links ~ 3/16/17

A look at D.E. Shaw: How a group of computer geeks changed Wall St [NYMag]

Paul Tudor Jones predicts inflation surge [CNBC]

Elliott Management urges change at Telecom Italia [Bloomberg]

Coatue's Philippe Laffont says AI will transform Intel and Twitter [Forbes]

On Bridgewater's big bet against Europe [Reuters]

Halvorsen's Viking moves into big data [Bloomberg]

Greenlight off to a rough start this year [Reuters]

US Treasury to close carried interest loophole [Reuters]

Paulson & Co Buys More International Tower Hill Mines

John Paulson's hedge fund firm Paulson & Co has filed a 13D and Form 4 with the SEC regarding its stake in International Tower Hill Mines (THM).  Per the filing, Paulson now owns 31.97% of the company with 59.59 million shares. 

The Form 4 notes they bought over 4.1 million shares on March 13th at a price of $0.50 per share.  The 13D notes this transaction was a private placement.

Per Yahoo Finance, International Tower Hill Mines is "a mineral exploration company, acquires and explores for mineral properties in Canada and the United States. It holds or has rights to acquire ownership or leasehold interests in the Livengood Gold Project that covers approximately 19,546 hectares located to the northwest of Fairbanks, Alaska. The company was formerly known as Tower Hill Mines Ltd. and changed its name to International Tower Hill Mines Ltd. in March 1991. International Tower Hill Mines Ltd. was founded in 1978 and is headquartered in Vancouver, Canada."

Thursday, March 15, 2018

ValueAct Capital Reduces Armstrong World Industries Exposure

Jeff Ubben's activist investment firm ValueAct Capital has filed a 13D and a Form 4 with the SEC regarding its stake in Armstrong World Industries (AWI).  Per the filing, ValueAct now owns 12.9% of the company with 6.85 million shares. 

The Form 4 notes they sold 2.35 million shares on March 12th at $59.60 per share.  We've also highlighted other recent portfolio activity from ValueAct here.

Per Google Finance, Armstrong World Industries is "a global producer of ceiling systems. The Company owns and operates the Building Products (Ceilings) segment. The Company designs, manufactures and sells ceiling systems (primarily mineral fiber, fiberglass wool and metal) around the world. Its products are used in commercial and institutional buildings. Its geographical segments include Americas (including Canada); Europe, Middle East and Africa (including Russia) (EMEA), and Pacific Rim. As of December 31, 2016, it had 15 manufacturing plants in eight countries, including six plants located throughout the United States. Its Americas segment sells products for use in single and multi-family housing. It sells commercial products to building materials distributors re-selling its products to contractors, subcontractors' alliances, architect and design firms, and facility owners. Residential ceiling products are sold in the Americas primarily to wholesalers and retailers."

Wednesday, March 14, 2018

What We're Reading ~ 3/14/18

On buybacks and the instant gratification of financial engineering [Frank Martin]

Michael Mauboussin on the future of active management [Sumzero]

Google's Larry Page: flying taxis, now exiting stealth mode [NYTimes]

Amazon strategy teardown [CB Insights]

Netflix's secrets to success [Variety]

18 cognitive bias examples visualized [Visual Capitalist]

Crowdsourcing: what 5 stocks would you hold for 10 years? [Scuttlebutt Investor]

Which advertising channels have the highest conversion rates? [Priceonomics]

Business schools rethink MBA strategy as market demand shifts [FT]

On shifting institutional investors from benchmark-based to goal-based [Institutional Investor]

Pershing Square Trims Automatic Data Processing (ADP) Position

Bill Ackman's activist investment firm Pershing Square Capital has filed an amended 13D with the SEC regarding its position in Automatic Data Processing (ADP).  Per the filing, Pershing now owns 7.2% of the company with 31.79 million shares.

It notes that, Pershing "sold a net amount of 5,004,633 shares of Common Stock and American-style call options for portfolio management purposes.”  You can view the full list of transactions here.

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

Per Google Finance, ADP 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."

Tuesday, March 13, 2018

Eminence Capital Increases Papa John's Pizza Position

Ricky Sandler's hedge fund firm Eminence Capital has filed a 13G with the SEC regarding shares of Papa John's Pizza (PZZA).  Per the filing, Eminence now owns 6.5% of the company with over 2.19 million shares. 

The filing was made due to portfolio activity on February 28th.  This means they've increased their position size up from the 568,026 shares they owned at the end of 2017.

Per Google Finance, Papa John's Pizza is "operates and franchises pizza delivery and carryout restaurants and, in certain international markets, dine-in and delivery restaurants under the trademark Papa John's. The Company operates through five segments: domestic Company-owned restaurants, North America commissaries, North America franchising, international operations and all other business units. North America is defined as the United States and Canada. Domestic is defined as the contiguous United States. International franchisees are defined as all franchise operations outside of the United States and Canada. As of December 25, 2016, there were 5,097 Papa John's restaurants in operation, consisting of 744 Company-owned and 4,353 franchised restaurants operating domestically in all 50 states and in 45 countries and territories. It offers pizza along with side items, including breadsticks, cheesesticks, chicken poppers and wings, dessert items and canned or bottled beverages. "

Tiger Global Shows Bright Scholar Education Stake

Chase Coleman's hedge fund firm Tiger Global has filed a 13G with the SEC regarding shares of Bright Scholar Education (BEDU).  Per the filing, Tiger now owns 5.8% of the company with over 1.57 million shares. 

The filing was made due to portfolio activity on February 28th.  They did not show an equity stake at the end of 2017 in their most recent 13F filing.

For more on this fund, we highlighted other recent portfolio activity from Tiger Global here.

Per Google Finance, Bright Scholar Education is "an operator of international and bilingual K-12 schools in China. The Company is engaged in providing international education to Chinese students. Its schools comprise international schools, bilingual schools and kindergartens. It offers a broad range of internationally-accredited curricula at its international schools. It also offers a range of complementary education services, including overseas camps and after-school programs. As of February 28, 2017, the Company had six international schools, which focus on internationally-accredited curricula and offer extracurricular activities and programs; 11 bilingual schools, which provide government-mandated curricula and developing students’ English proficiency; and 34 bilingual kindergartens, including 11 that deliver international curricula. As of February 28, 2017, the Company operated 51 schools."

Trian Partners Buys More Bank of New York Mellon (BK)

Nelson Peltz's activist investment firm Trian Partners has filed a Form 4 with the SEC regarding its position in Bank of New York Mellon (BK). 

Per the filing, Trian was buying 360,000 BK shares on March 9th at weighted average prices of $56.5188.  After this buy, Trian now owns over 16.12 million shares.

Per Google Finance, Bank of New York Mellon is "an investments company. The Company operates businesses through two segments: Investment Management and Investment Services. The Company also has an Other segment, which includes the leasing portfolio, corporate treasury activities (including its investment securities portfolio), derivatives and other trading, corporate and bank-owned life insurance and renewable energy investments, and business exits. As of December 31, 2016, the Company had $29.9 trillion in assets under custody and/or administration and $1.6 trillion in assets under management. The Company's Investment Management boutiques offer a range of actively managed equity, fixed income, alternative and liability-driven investments, along with passive products and cash management. The Company offers asset servicing, clearing services, issuer services and treasury services to its clients. "

Monday, March 12, 2018

Viking Global Discloses US Steel (X) Position

Andreas Halvorsen's hedge fund firm Viking Global has filed a 13G with the SEC regarding shares of US Steel (X).  Per the filing, Viking now owns 5.5% of the company with over 9.66 million shares. 

This is a newly disclosed equity position for the firm and the filing was made due to portfolio activity on February 27th.  This is now around a $425 million position, making it a top-20 US holding in their portfolio. 

Per Google Finance, US Steel is "an integrated steel producer. The Company is engaged in producing flat-rolled and tubular products with production operations in North America and Europe. The Company operates through three segments: Flat-Rolled Products (Flat-Rolled), U. S. Steel Europe (USSE) and Tubular Products (Tubular). The Flat-Rolled segment includes the operating results of its integrated steel plants and equity investees in the United States involved in the production of slabs, rounds, strip mill plates, sheets and tin mill products, as well as all iron ore and coke production facilities in the United States. The USSE segment includes the operating results of U. S. Steel Kosice (USSK) and its integrated steel plant and coke production facilities in Slovakia. The Tubular segment includes the operating results of its tubular production facilities, primarily in the United States and equity investees in the United States and Brazil."