ValueAct Capital Goes Activist on Moody's (MCO), Buys More Motorola Solutions (MSI) ~ market folly

Thursday, July 21, 2011

ValueAct Capital Goes Activist on Moody's (MCO), Buys More Motorola Solutions (MSI)

Jeff Ubben's ValueAct Capital has been quite active recently as evidenced by two 13D filings submitted to the SEC. As Ubben has explained in a previous interview, his fund employs an activist value investing strategy.

Going Activist on Moody's (MCO)

First, ValueAct has gone activist on Moody's (MCO) according to a 13D just filed. Per the filing, we learn that ValueAct has a 6.1% ownership stake in MCO with 13,866,970 shares.

At the end of the first quarter they only owned 8.2 million shares. The hedge fund firm has purchased over 5.5 million shares over the past 3 months, increasing their position size by over 67%. ValueAct were buying as recently as July 12th through 19th, adding at prices between $35-37, right where shares currently trade.

While Ubben's firm has filed a 13D signifying their activist intent with the position, the filing contains standard boilerplate about monitoring their investment and does not lay out any specific plans.

Moody's stock is interesting mainly because you have prominent investors on both sides of the table. Warren Buffett's Berkshire Hathaway owns a significant stake in MCO but was selling some shares last year.

David Einhorn's Greenlight Capital, on the other hand, has been short MCO and laid out their short thesis here. With ValueAct now coming to the table, it's clear they intend to apply their trademark activist style. We'll see what happens.

Buying More Motorola Solutions (MSI)

Ubben's hedge fund also just filed an amended 13D with the SEC regarding shares of Motorola Solutions (MSI). They now show a 7.0% ownership stake in MSI with 23,601,000 shares.

ValueAct recently purchased over $161 million worth of MSI shares, buying in late June and early July at prices ranging from $43.95 to $45.50 per share.

As we outlined in Ubben's previous pitch on MSI, ValueAct likes Motorola Solutions due to its improving margins and the fact that it is still growing despite a downcycle. MSI came to be as a result of Motorola splitting into two separately traded entities: MSI and Motorola Mobility (MMI).

For more on ValueAct Capital, head to Ubben's interview about his fund.

blog comments powered by Disqus