Friday, March 20, 2015

Eminence Capital Increases GNC Holdings Position

Ricky Sandler's hedge fund firm Eminence Capital has filed a 13G with the SEC regarding its stake in GNC Holdings (GNC).  Per the filing, Eminence now owns 5.2% of the company with over 4.6 million shares.

They've increased their position size by 880,848 shares since the end of the first quarter.  The filing was made due to activity on March 10th.

Per Google Finance, GNC Holdings is "a global specialty retailer of health and wellness products. The Company has three segments: Retail, Franchise and Manufacturing/Wholesale."

You can view previous Eminence portfolio activity here.

Soros Fund Discloses Exa Corp Stake

George Soros' family office Soros Fund Management has filed a 13G regarding shares of Exa Corp (EXA).  Per the filing, Soros now owns 9.15% of the company with over 1.266 million shares.

This is a newly disclosed equity position for the firm and the filing was required due to portfolio activity on March 9th.

Per Google Finance, Exa Corp is "engaged in developing, selling and supporting simulation software and services that vehicle manufacturer’s use. The Company is primarily focused on the ground transportation market, but is also beginning to focus in the aerospace, oil and gas production, chemical processing, architecture, engineering and construction, power generation, biomedical and electronics industries. The Company’s product suite includes desktop-based simulation preparation products, server-based simulation products and desktop-based simulation analysis products."

Hedge Fund Links ~ 3/20/15

Why hedge funds still make sense for pension funds [NYTimes]

Ray Dalio on the power of not knowing [Institutional Investor]

A mystery in hedge fund investing [NYTimes]

Newcomers jump into activist investing, eying returns and capital [Reuters]

Activist investors can lose even when they get their way [Yahoo Finance]

The smart money's take on a potential Fed hike [CNBC]

Hedge fund investments are getting bigger, weirder, and more creative [IBTimes]

Tiger Consumer to shut down [Bloomberg]

Firm buys stake in JANA Partners [NYTimes]

The impact of the cloud on the hedge fund industry [HedgeWeek]

This is how billionaires enjoy super-low tax rates [CNBC]

Thursday, March 19, 2015

Sequoia Fund's 2014 Year-End Letter

Ruane Cunniff & Goldfarb is out with its 2014 year-end letter for its Sequoia Fund.  They returned 7.56% for the year and run a pretty concentrated portfolio of large bets.  At the end of the year, their largest holdings were: Valeant Pharmaceuticals, Berkshire Hathaway, TJX, Fastenal, O'Reilly Automotive, Mastercard, and Idexx Labs.

Their letter also outlines their latest thinking on the above companies, as well as some of their new positions like Richemont, Cabela's, and Constellation Software.

Embedded below is Sequoia Fund's 2014 annual report:

You can download a .pdf copy here.

Lee Cooperman Trims Altisource Portfolio Solutions Stake

Omega Advisors' Lee Cooperman has filed a Form 4 with the SEC regarding his position in Altisource Portfolio Solutions (ASPS).  Per the filing, Cooperman has sold around 262,000 shares.

He was selling on March 16th and 17th at weighted average prices of $16.33 and $15.57.  ASPS has since continued to slide lower and currently trades around $12.73.  We've outlined the ASPS situation here previously.

Per Google Finance, Altisource Portfolio Solutions is "a provider of marketplace and transaction solutions for the real estate, mortgage and consumer debt industries. The Company operates through three business segments: Mortgage Services, Financial Services and Technology Services. The Company offers mortgage services, such as Asset management, Insurance services, Residential property valuation, Default management services and Origination management services. Financial Services provide collection and customer relationship management services to debt originators, servicers and the utility and insurance industries. Technology Services provides software applications and technologies that manage the end-to-end lifecycle for residential and commercial mortgage loan servicing, including the automated management and payment of a distributed network of vendors."

We've detailed other recent portfolio activity from Cooperman here.

Marcato Capital Exits Life Time Fitness

Mick McGuire's hedge fund firm, Marcato Capital Management, has filed an amended 13D with the SEC regarding its stake in Life Time Fitness (LTM).  Per the filing, Marcato no longer holds shares in the company (they previously owned over 3.11 million shares).

The filing was made due to activity on March 16th.  Life Time Fitness recently agreed to a buyout from Leonard Green and TPG in a $4 billion deal.  As such, LTM stock has traded as a risk arbitrage name.  If we were to speculate, Marcato probably saw more attractive uses for their capital, rather than waiting around to capture the deal spread.

For more from this hedge fund, we also recently posted Marcato's presentation on Bank of New York Mellon.

Per Google Finance, Life Time Fitness is "engaged in designing, building, and operating multi-use sports and athletic, professional fitness, family recreation and spa centers in a resort-like environment, principally in residential locations of major metropolitan areas in the United States and Canada."

Wednesday, March 18, 2015

What We're Reading ~ 3/18/15

The Checklist Manifesto: How to Get Things Right [Atul Gawande]

Ray Dalio warns of 1937-style rate risk [FT]

A dozen things learned from David Tepper about investing [25iq]

Interview with short-seller Marc Cohodes [First Adopter]

In praise of short sellers [New Yorker]

Lumber Liquidators' campaign of distraction and deception [Seeking Alpha]

Crispin Odey says following China could lead to recession [Sydney Morning Herald]

Why the smart money is betting on WWE [First Adopter]

A pitch on Interactive Brokers [Value Venture]

Live Nation Entertainment: an unregulated monopoly? [PunchCardBlog]

A look at Softbank [Institutional Investor]

With the benefit of hindsight [Morgan Housel]

Stock performance before, during, and after recessions [Wealth of Common Sense]

The majority of people are struggling to save for retirement [Wealth of Common Sense]

The future of the four horsemen: Amazon, Apple, Facebook & Google [YouTube]

Consumer behavior across pay-TV, VOD, and OTT [Digitalsmiths]

Zillow, the industry, and reading the tea leaves [Notorious Rob]

Tuesday, March 17, 2015

MarketFolly's 6th Annual Free March Madness Bracket Contest

College basketball's championship tournament, "March Madness," is finally here.  For the 6th year in a row, Market Folly will be hosting its annual free bracket contest for fellow college basketball fans.  Entry is completely free!

Join Market Folly Madness

To join the free contest, please click this link:

(If you don't have a CBS Sports account, simply sign up for free)

The password to join the group is: folly

Contest Prizes

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

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

3rd place: A copy of Howard Marks' popular book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor

To be entered into the contest, you must fill out your bracket picks before the main games start this Thursday (March 19th).  Only 1 entry per person allowed.  Good luck!

Children's Investment Fund Boosts Time Warner Cable Stake

Chris Hohn's hedge fund firm, Children's Investment Fund, has filed a 13G with the SEC regarding its stake in Time Warner Cable (TWC).  Per the filing, Children's now owns 5% of the company with over 14.1 million shares.

This means Hohn has increased his position size by over 4.23 million shares since the end of the first quarter.  The filing was made due to portfolio activity on March 6th.

TWC is set to be taken over by Comcast (CMCSA), pending regulatory review.  Hohn must be pretty confident that this deal goes through, though there's no way to know if/how he's hedged out this position.  Even if this deal does fall through, TWC shares likely have a 'floor' as it's been reported that Charter Communications (CHTR) would then be interested in acquiring TWC (something they tried to do previously).

US cable stocks in general also have rallied sharply over the past month on the news that while the FCC has imposed net neutrality, the operators won't be regulated on pricing.  One of the key tenets of the cable investment thesis is that these companies are oligopolies and could have pricing power for their broadband products.  Even if these companies lose video subscribers as customers shift to over-the-top (OTT)/streaming content products, people will still need a (fast) internet connection to receive this content.  

Per Google Finance, Time Warner Cable is "a provider of video, high-speed data and voice services in the United States with clustered cable systems located in five geographic areas including New York State, the Carolinas, the Midwest, Southern California and Texas."

Plymouth Lane Capital Increases Scientific Games Position

Jonathan Salinas' hedge fund firm, Plymouth Lane Capital, has filed a 13G with the SEC regarding its position in Scientific Games Corp (SGMS).  Per the filing, Plymouth Lane now owns 5.5% of the company with over 4.62 million shares.

This means their position size has increased by over 3.66 million shares since the end of the first quarter.  The filing was made due to portfolio activity on March 9th.

About Plymouth Lane Capital

This is the first time this hedge fund has been covered on the site.  Plymouth Lane primarily operates an equity strategy and was launched in April 2013.  Prior to founding Plymouth Lane, Jon Salinas worked at Marble Arch Investments and earned his MBA from Columbia Business School.

At a prior Columbia Business School conference, Salinas noted that you have to focus on the margin of safety if it's an event-driven idea.  But if it's a compounder-type business, he said you have to have high confidence that earnings will compound at the rate expected.  He also mentioned that if you're taking concentrated positions, it's detrimental to let thesis creep go unnoticed.  If evidence contrary to your thesis pops up, you have to be able to recognize it and act.

About Scientific Games Corp

Per Google Finance, Scientific Games is "a developer of technology-based products, services and is a supplier of solutions to lottery and gaming organizations across the world. The Company’s products and services include instant lottery games, lottery gaming systems, terminals and services, and Internet applications, as well as server-based interactive gaming machines and associated gaming control systems. The Company provides products and services, such as instant and draw-based lottery games, electronic gaming machines and game content, server-based lottery and gaming systems, sports betting technology, loyalty and rewards programs, and social, mobile and interactive content and services. The Company operates in three segments: Instant Products, Lottery Systems, and Gaming."

Marcato Capital's Presentation on Bank of New York Mellon

Mick McGuire's hedge fund firm, Marcato Capital Management, has released a letter and presentation to shareholders of Bank of New York Mellon (BK) outlining their thoughts on the company and why they feel a leadership change is in order.

Embedded below is Marcato's letter to BK shareholders:

You can download a .pdf copy of the letter here.

And also embedded below is Marcato's presentation on Bank of New York Mellon:

You can download a .pdf copy of the presentation here.

McGuire is known for taking an activist approach in his investments and this case is no different.  Prior to founding Marcato, he worked at Bill Ackman's Pershing Square, another well known activist investment firm.

Lee Cooperman Increases New Senior Investment Group Stake

Lee Cooperman of Omega Advisors has filed a 13G with the SEC regarding his position in New Senior Investment Group (SNR).  Per the filing, Cooperman now owns 5.13% of the company with over 3.4 million shares.

He's increased his holdings by 803,327 shares since the end of the first quarter.  The filing was required due to activity on March 5th.

We've detailed other recent portfolio activity from Cooperman here.

Per Google Finance, New Senior Investment Group is "a real estate investment trust (REIT) with a portfolio of senior housing properties across the United States. The Company’s portfolio is categorized into two segments: Managed Properties, which are operated by property managers as property management agreements and Triple Net Lease Properties, which the Company lease to tenants. The Company’s managed portfolio includes 42 assisted living, memory care and independent living properties and its triple net lease portfolio includes 57 assisted living, memory care, independent living and continuing care retirement communities."