Friday, August 25, 2017

Hedge Fund Links ~ 8/25/17

Carl Icahn's failed raid on Washington [New Yorker]

Paul Singer's Q2 letter warns of crash in China [ValueWalk]

Profile of Sequoia Fund [Washington Post]

Latest thoughts from Tourbillon Capital [Business Insider]

Rentec's Medallion fund opened for first time in forever [Bloomberg]

Former Harvard money manager launching digital currency hedge fund [Bloomberg]

Thursday, August 24, 2017

Three Bays Capital Boosts Red Rock Resorts Stake

Matthew Sidman's hedge fund firm Three Bays Capital has filed a 13G with the SEC regarding its position in Red Rock Resorts (RRR).  Per the filing, Three Bays now owns 5.1% of the company with over 3.48 million shares.

This is an increase of over 2 million shares since the end of the second quarter when they owned 1.47 million shares.  The filing was made due to activity on August 18th.

Prior to founding Three Bays, Sidman worked at Highfields Capital.

Per Google Finance, Red Rock Resorts is "a gaming, development and management company. The Company's segments include Las Vegas operations, Native American management, and Corporate and other. The Las Vegas operations segment includes all of its Las Vegas area casino properties and the Native American management segment includes its Native American management arrangements. It provides gaming and entertainment for residents of the Las Vegas regional market and visitors. Its Las Vegas portfolio includes approximately 10 gaming and entertainment facilities and over 10 smaller casinos, offering approximately 20,300 slot machines, over 350 table games and approximately 4,750 hotel rooms. The Company offers a range of gaming and non-gaming entertainment options. It also controls over seven gaming-entitled development sites consisting of approximately 398 acres in Las Vegas and Reno, Nevada. The Company manages and owns interest in Station Casinos LLC, which is the provider of gaming and entertainment."

Makaira Partners Acquires More Wesco Aircraft Holdings

Tom Bancroft's investment firm Makaira Partners has filed a Form 4 with the SEC regarding its stake in Wesco Aircraft Holdings (WAIR).  Per the filing, Makaira acquired WAIR shares on August 16th, 17th, 18th, and 21st.

They were buying at weighted average prices between $7.65 to $7.85.  In total, they bought 123,067 shares.  After these transactions, they now own over 10 million shares.

Prior to founding Makaira, Bancroft worked with Lou Simpson.

Per Google Finance, Wesco Aircraft Holdings is "a distributor and provider of supply chain management services to the global aerospace industry. The Company operates through two segments: North America and Rest of World. As of September 30, 2016, the Company supplied over 565,000 active stock-keeping units (SKUs), including C-class hardware, chemicals, electronic components, bearings, tools and machined parts. The Company's products include Hardware, Chemicals, Electronic Components, Bearings and Other Products. Its Services include Quality Assurance, Kitting and JIT Supply Chain Management. It caters to commercial, military and general aviation sectors, including the original equipment manufacturers (OEMs) and their subcontractors, through which it supports various Western aircraft programs, and also sells products to airline-affiliated and independent maintenance, repair and overhaul (MRO) providers. It also services industrial customers."

Corvex Management Increases CenturyLink Position

Keith Meister's activist firm Corvex Management has filed an amended 13D with the SEC regarding its stake in CenturyLink (CTL).  Per the filing, Corvex now owns 6.6% of the company with 36.54 million shares. 

They've increased their stake recently by acquiring a net of 550,000 shares of common stock on August 3rd and 17th, while also acquiring 5 million shares underlying call options.

At the end of the second quarter, Corvex only owned 18.99 million shares, so they've clearly been out accumulating more exposure in recent months. 

CenturyLink is Corvex's largest position.  Their total CTL stake is comprised of 19.58 million shares of common stock and 17 million shares underlying call options.  Of the calls, 4 million of those shares have an exercise price of $28 and expiration of October 20, 2017.  Another 8 million of those have a strike of $30 and same expiration date, while another 5 million are in January 2018 $23 calls. 

We've also highlighted previous portfolio activity from Corvex here.

Per Google Finance, CenturyLink is "n integrated communications company. The Company is engaged in providing an array of communications services to its residential and business customers. Its segments include business, which provides strategic, legacy and data integration products and services to small, medium and enterprise business, wholesale and governmental customers, including other communication providers, and consumer, which provides strategic and legacy products and services to residential customers. Its communications services include local and long-distance voice, broadband, Multi-Protocol Label Switching (MPLS), private line (including special access), Ethernet, colocation, hosting (including cloud hosting and managed hosting), data integration, video, network, public access, Voice over Internet Protocol (VoIP), information technology and other ancillary services. As of December 31, 2016, it served approximately 5.9 million broadband subscribers and 325,000 Prism TV subscribers."

Wednesday, August 23, 2017

What We're Reading ~ 8/23/17

New book from Bridgewater's Ray Dalio, Principles: Life and Work [Ray Dalio]

What is and isn't a moat [Johnson Inv]

Always invert [Above the Market]

The stereo speaker company giving sight to self-driving cars [SF Chronicle]

The internal combustion engine is not dead yet [NYTimes]

Is Tesla (TSLA) really a disruptor? And why the answer matters [HBR]

Chill: robots won't take all our jobs [Wired]

TripAdvisor (TRIP) can fly higher [Barrons]

The incredible shrinking Sears (SHLD) [NYTimes]

Amazon vs Maersk: the clash of titans shaking the container industry [Platts]

Jack Ma (BABA) is ahead of Jeff Bezos in grocery store ambitions [Bloomberg]

How Softbank (SFTBY) is reshaping global tech [The Information]

How Baidu (BIDU) will win China's AI race, and maybe the world's [Wired]

Quantum computing comes of age [Alphr]

Your brain on money [A Wealth of Common Sense]

Pershing Square's ADP Presentation

Bill Ackman's activist investment firm Pershing Square has a new position: Automatic Data Processing (ADP).  The firm recently released a slideshow presentation on their investment.

Their transformation plan for ADP includes the following:

- Fix corporate structure, corporate bloat and inefficiency
- Accelerate investments in product and back-end improvements
- Accelerate product migrations
- Reduce excess support personnel, focus on value-add services
- Increase sales force productivity

As a result, they see the company increasing growth and margins.  Pershing has also been trying to gain board representation but so far has been unsuccessful.  

Embedded below is Pershing Square's ADP Presentation: "The Time Is Now"

You can download a .pdf copy here.

For more information, they've also started a website on their stake:

ValueAct Shows KKR Stake, Adds to Trinity Industries, Trims Willis Towers Watson

Jeff Ubben's activist investment firm ValueAct Capital has been quite busy with SEC filings recently.  Here's a summary of all the activity:

ValueAct Shows KKR Stake

Back in April, we highlighted how ValueAct reportedly took a KKR stake.  Well now we get further confirmation of the exact size of that investment via a recently filed 13D with the SEC.

Per the filing, ValueAct now owns 6.1% of KKR (KKR) with over 28.55 million shares and the purchase was comprised of common stock and cash-settled swaps.

The filing also notes they've had discussions with management and will continue to do so.  They were buying in late June at $18.62 and throughout July around $19.50 and into August in the $18's.

Per Google Finance, KKR is "a global investment firm that manages investments across multiple asset classes, including private equity, energy, infrastructure, real estate, credit and hedge funds. The Company's business offers a range of investment management services to its fund investors, and provides capital markets services to its firm, its portfolio companies and third parties. The Company conducts its business with offices across the world, providing it with a global platform for sourcing transactions, raising capital and carrying out capital markets activities. The Company operates through four segments: Private Markets, Public Markets, Capital Markets and Principal Activities. It operates and reports its combined credit and hedge funds businesses through the Public Markets segment. The Capital Markets segment consists primarily of its global capital markets business. Through its Principal Activities segment, the Company manages the firm's assets and deploys capital."

Ubben's Firm Boosts Trinity Industries Exposure

Second, ValueAct has filed a 13D and a couple of Form 4's with the SEC regarding its position in Trinity Industries (TRN).

Per the 13D, Jeff Ubben's firm now owns 11% of Trinity Industries with over 16.72 million shares.  But a more recent Form 4 indicates their stake is now 16.94 million shares.

The Form 4 indicates ValueAct was buying TRN shares in mid-august between $28.11 and $28.57.

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."

ValueAct Trims Willis Towers Watson Stake

Third, in a Form 4 with the SEC, Ubben's firm has disclosed activity in their Willis Towers Watson (WLTW) stake. They were selling some shares on August 17th, 18th, and 21st at $150.04, $148.76, and $149.14.  In total, they sold 106,000 shares and they're left owning 5.18 million shares.

Per Google Finance, Willis Towers Watson "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."

For more from this investment firm, we highlighted how ValueAct recently boosted its position in another stock as well.

Monday, August 21, 2017

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