Carl Icahn Sells More Nuance Communications, Files 13D on Manitowoc Foodservice

Activist investor Carl Icahn has made a few more SEC filings as of late.

First, he has updated his position in Nuance Communications (NUAN).  We already highlighted how he trimmed his NUAN stake earlier this month and he has done so again.

A 13G filed with the SEC shows that Icahn now owns around 30 million shares of NUAN, or around 9.88% of the company.  This is down from the 34.4 million shares he owned recently.  The filing shows he sold shares on March 16th at a price of $19.00.  NUAN shares currently trade around $19.49.

Per Google Finance, Nuance Communications is "a provider of voice and language solutions for businesses and consumers across the world. The Company's solutions are used in healthcare, mobile, consumer, enterprise customer service, and imaging markets. The Company offers accuracy, natural language understanding capability, domain knowledge and implementation capabilities. The Company's solutions are based on the Company's voice and language platform and are used by businesses for tasks and services, such as requesting information from a phone-based self-service solution, dictating medical records, searching the mobile Web by voice, entering a destination into a navigation system, or working with portable document format (PDF) documents. The Company offers its solutions to its customers in a range of ways, including through products, hosting, professional services and maintenance and support. The Company operates in four segments: Healthcare, Mobile and Consumer, Enterprise, and Imaging." 


Icahn Files 13D on Manitowoc Foodservice

Secondly, Icahn has also filed with the SEC regarding shares of Manitowoc Foodservice (MFS).  Per the filing, Icahn now owns 7.73% of the company with over 10.58 million shares.  Icahn acquired these shares in connection with the company's separation from Manitowoc, a catalyst he pushed for. 

Icahn gets board representation on this new entity as part of a prior agreement.  The filing was made due to activity on March 4th.

Per Google Finance, Manitowoc Foodservice, Inc. is a commercial foodservice equipment company. The Company designs, manufactures and services an integrated portfolio of hot and cold category products. The Company supplies foodservice equipment to commercial and institutional foodservice operators, such as full-service restaurants, quick-service restaurant chains, hotels, caterers, supermarkets, convenience stores, business and industry, hospitals, schools and other institutions. The Company operates through three segments: Americas, EMEA and APAC. The Americas segment includes the United States, Canada and Latin America. The EMEA segment consists of Europe, Middle East and Africa, including the United Kingdom, the Nordic countries, Germany, France, Spain, Italy and Switzerland, as well as Egypt, South Africa and Dubai. The APAC segment consists of markets in China, Singapore, Australia, India, Malaysia, Indonesia, Thailand and the Philippines.

Carl Icahn Trims Stakes In Nuance Communications, Tegna & Mentor Graphics

Activist investor Carl Icahn has been busy lately, filing numerous portfolio disclosures with the SEC.  Here's a breakdown of his activity:

Trims Nuance Communications Stake

Per a Form 4 filed with the SEC, Icahn sold 26.3 million shares of Nuance Communications (NUAN) on March 9th at a price of $19.  After the sale, he still owns over 34.46 million shares of the company.  This means he still owns 11.32% of NUAN.

Per Google Finance, Nuance Communications is "a provider of voice and language solutions for businesses and consumers across the world. The Company's solutions are used in healthcare, mobile, consumer, enterprise customer service, and imaging markets. The Company offers accuracy, natural language understanding capability, domain knowledge and implementation capabilities. The Company's solutions are based on the Company's voice and language platform and are used by businesses for tasks and services, such as requesting information from a phone-based self-service solution, dictating medical records, searching the mobile Web by voice, entering a destination into a navigation system, or working with portable document format (PDF) documents. The Company offers its solutions to its customers in a range of ways, including through products, hosting, professional services and maintenance and support. The Company operates in four segments: Healthcare, Mobile and Consumer, Enterprise, and Imaging."


Reduces Tegna Exposure

Additionally, Icahn filed an amended 13D with the SEC regarding his stake in Tegna (TGNA).  Per the filing, he sold shares throughout early March at prices around $24.xx.  After selling around 2.07 million shares, Icahn still owns 4.88% of the company with over 10.7 million shares.

Per Google Finance, Tegna is "a media and marketing solutions company. The Company is engaged in providing local content on a range of platforms in the United States. The Company operates through Broadcasting and Digital segments. It also provides digital marketing services and Internet-based human resource solutions. Its digital media products and services include search, social media and Website development, among others. The Company offers its services in a range of geographies, demographics and content areas. The Company provides consumers with the information and entertainment, and connects consumers to their communities through various platforms, such as television stations, desktop, smartphone and tablet products. Its Broadcasting segment includes an independent station group of network affiliates. The Company's Digital business segment includes Cars.com, CareerBuilder and Shoplocal."


Sells Some Mentor Graphics

Lastly, the activist investor has sold some of his Mentor Graphics (MENT) position per a 13D filed with the SEC.  Icahn was selling shares on March 7th and 8th at prices of $19.46 and $19.54 and now owns 4.6% of the company with over 5.48 million shares.  This compares to his previous ownership of 16.1 million shares of MENT at the end of 2015.

Per Google Finance, Mentor Graphics is "a supplier of electronic design automation (EDA) tools - computer software and emulation hardware systems used to automate the design, analysis and testing of complex electro-mechanical systems, electronic hardware and embedded systems software in electronic systems and components. The Company's products are used in the design and development of a diverse set of electronic products, including automotive electronics, computers and workstations, digital cameras, cellular telephones, medical devices, smart phones, industrial electronics and manufacturing systems. The Company segregated revenues into five categories of similar products and services: Scalable Verification, IC Design to Silicon, Integrated System Design, New and Emerging Products, and Services and Other."

Carl Icahn Reveals Talisman Energy Position, Gains Board Seats at Nuance Communications

Carl Icahn has been busy with positions in Talisman Energy (TLM) and Nuance Communications (NUAN).  The breakdown is below:


Icahn's New Talisman Energy Stake

Icahn simultaneously tweeted and filed a 13D with the SEC, disclosing a 5.97% ownership stake in Talisman Energy (TLM).  He owns 61,554,602 shares and this is a brand new position for him.

On Twitter, Icahn noted that he, "may have conversations with mgmt re strategic alternatives, board seats, etc."

So if you aren't already, follow @Carl_C_Icahn on Twitter, and don't forget to follow @MarketFolly if you haven't already.

Per Google Finance, Talisman Energy is "an oil and gas producers, through a combination of exploration, development and acquisitions. The Company's business activities include exploration, development, production, transportation and marketing of crude oil, natural gas and natural gas liquids. Talisman's three main operating areas are North America, the North Sea and Southeast Asia."


Icahn Gains Board Seats at Nuance Communications

Icahn has reached an agreement with Nuance Communications (NUAN) to gain 2 board seats.  Carl Icahn's son Brett Icahn will become a director, along with David Schecter.

Per Google Finance, Nuance Communications is "a provider of voice and language solutions for businesses and consumers globally. The Company's solutions are used in healthcare, mobile, consumer, enterprise customer service, and imaging markets. The Company offers accuracy, natural language understanding capability, domain knowledge and implementation capabilities. The Company's solutions are based on the Company's voice and language platform and are used by businesses for tasks and services, such as requesting information from a phone-based self-service solution, dictating medical records, searching the mobile Web by voice, entering a destination into a navigation system, or working with portable document format (PDF) documents."

What We're Reading ~ Analytical Links 8/22/13

Rising markets batter short sellers [WSJ]

What has QE actually accomplished? [Mauldin Economics]

Cash is a drug for investors, redux [Abnormal Returns]

The best value investing quotes [Old School Value]

ESPN holds talks for web-based TV [Bloomberg]

Chinese search for infant formula goes global [NYTimes]

Barnes & Noble (BKS) reverses strategy in train wreck of a call [GigaOm]

8 pivotal acquisitions made by Google (GOOG) [Hongkiat]

In-depth reports on for-profit educators [Senate.gov]

Is the new Gmail killing email marketing? [BusinessWeek]

Life after Siri: Nuance's (NUAN) climb to being your digital assistant [Forbes]

On gold losing its shine [Telegraph]

Overseas investors spend $50 billion on Florida real estate [BizJournals]

JPMorgan's latest guide to markets [JPMorgan]

Newly revealed 1975 letter from Warren Buffett [Fortune]

Phone companies are winning new TV watchers, cable & satellite not so much [GigaOm]

Strategist Jeff Saut: The Easy Money's Been Made

Strategist Jeff Saut's latest market commentary is entitled 'Lose Cash.' In it, he talks about how the market is off to its eighth best start of the year as managers have put cash to work. However, he's still not ready to shed his cautious stance. Why?

Well, he highlights the divergence between stock prices and US Economic data trends in April 2011 and thinks a similar situation is occurring now. Saut feels that "all the good news is on the table" and points out other signs of concern such as massive insider selling, as well as falling 10 year Treasury prices (rising rates).

Saut reiterates that he is not getting "too bearish" because he expects stocks to be higher at the end of the year. But it does sound as though he expects a pullback in the intermediate term. Last week we detailed how Saut says to position your portfolio this year.

He also recommended two stocks that have declined recently for "one-off" reasons: Acme Packet (APKT), Nuance (NUAN), and Vocus (VOCS).

Embedded below is Jeff Saut's market commentary:



You can download a .pdf copy here.

For more investment strategy from Saut, also check out dividend stocks he likes.

Jeff Saut: Buying on Weakness

Jeff Saut, Chief Investment Strategist over at Raymond James, is out with his latest commentary entitled 'Don't Worry, Be Happy.' In it, he opines that while money does not equate to happiness, the stock market was certainly happy last month as it increased 7.0% after being down 8.2% in May and losing an additional 5.4% in June. Last time around, Saut argued that it might be time to re-balance portfolios and laid out a theoretical businessman's risk portfolio.

Saut pats himself on the back for 'calling the rally' that he expected due to oversold conditions at the beginning of July. Recently, a Dow Theory Buy Signal was registered according to the market strategist as both the Dow Jones Industrial Average and Dow Jones Transportation Average closed above their previous June highs. However, this signal comes after an already powerful rally has taken place and numerous other theorists do not think a signal has been registered in the true sense of the definition. This would require a close above 11,204 on the Dow Jones and above 4,806 on the transports.

That said, Saut is now a buyer on weakness. He issues a caveat with that statement saying he will use fairly close stop loss triggers to manage the risk. As we've detailed recently, Saut has outlined his risk management principles and has also argued that risk adjusted stock selection is the key to success.

So, what stocks to buy on weakness? The Chief Investment Strategist feels that the following stocks are solid choices:

Value Picks:
Microsoft (MSFT)
Intel (INTC)
Wal-Mart (WMT)
Allstate (ALL)
Johnson & Johnson (JNJ)

Growth Plays:
McAfee (MFE)
Iridium (IRDM)
NII Holdings (NIHD)
Nuance (NUAN)
Parexel (PRXL)

As you can see, Saut favors many high quality blue chip names on the value side. This is exactly what we saw this morning as Jeremy Grantham favors high quality US stocks. Additionally, we've detailed hedge fund T2 Partners' bullish presentation on 3 large cap stocks.

Overall, Jeff Saut thinks that the 200-day moving average (overhead resistance) will be taken out. And as of this second, that's exactly what's happening. We'll have to see if the market can hold and close above that level. He ends by quoting Lowry's who writes,

"In summary, as the major price indexes have moved sideways since the May 25th low, market conditions have showed clear signs of strengthening, not weakening. While overbought readings on short-term indicators suggest the potential for a near-term pullback, any decline should act only as a temporary setback in the rally from the July 2nd low and is unlikely to represent the next leg of a more prolonged move lower."

Embedded below is Jeff Saut's latest investment strategy from Raymond James:



You can download a .pdf copy here.

Here's the rest of our 'market-strategist-Monday' pieces if you missed any of them:

- Oaktree Capital's Howard Marks on the greek tragedy
- PIMCO's Bill Gross: latest investment outlook
- GMO's Jeremy Grantham favors high quality US stocks

Jeff Saut: Portfolio Rebalancing May Be In Order

Market strategist Jeff Saut believes that asset allocation is the key to alpha generation. But to be more specific, he is not dogmatic about the approach and instead prefers dynamic asset allocation. This is an extension of normal asset allocation in that it incorporates the use of various indicators to complement the normal analysis, intuition, and common sense that applies to creating portfolios. He uses this diversification as a tool to mitigate risk. Those of you increasingly concerned about the presence of risk in your portfolios can heed Jeff Saut's risk management principles.

The reason he brings this whole notion up in his weekly investment strategy is because he feels we are approaching a point in the markets where rebalancing portfolios might be in order. His proprietary intermediate-term indicator, stochastic indicators, and the 12-month moving average are all warranting caution. However, the Raymond James Chief Investment Strategist has been bullish on equities in the near-term in part due to their massively oversold condition. He recently proclaimed that risk adjusted stock selection is the key to portfolio success.

In particular, Saut has been fond of technology stocks as their weekly forward earnings per share are at a record high. He has mentioned Microsoft (MSFT) numerous times as an attractive play. This morning we posted up a bullish presentation on MSFT from hedge fund T2 Partners as well. Saut's other technology stock favorites include Iridium (IRDM), NII Holdings (NIHD), Nuance (NUAN) and PAREXEL (PRXL).

In the end, Saut feels the signal to rebalance is coming soon. Ultimately, the type of portfolio to rebalance stands to be determined. The type of portfolio to rebalance to is largely reliant upon whether or not the market can re-capture its 200-day moving average. The market is currently trading right around that level, testing resistance to the upside. Saut feels that many technical indicators will soon resolve themselves and will determine just how defensive (or not) a portfolio should be. In a separate post, we'll outline Saut's "Businessman's risk" portfolio and how it is allocated. In the mean time, embedded below is Saut's full market commentary for this week examining the potential upcoming rebalance period:



You can download a .pdf copy here.

More analysis from the market strategist can be found at Jeff Saut's risk management principles as well as his previous commentary outlining keys to portfolio success in 2010.

Analysts' Best Stock Picks For 2010

Raymond James' global research is out with a list of their analysts' best stock picks for 2010. Our previous post on this list was taken down due to the list not being distributed to the public yet. So, now that it is available publicly, here is their list. Their picks from this past year (2009) was up 52% compared to an S&P return over the same period of 30.1%, so they've outperformed by a wide margin. In fact, their annual list of stock picks has outperformed the S&P 500 in all year but one since 1996.



Their goal is to identify stocks that will produce "above-average price appreciation" over the course of the next year. They certainly did that with their 2009 list and so let's see if they can do it again with their impending 2010 selections.

Investment theme and stock pick lists for 2010 seem to be popular amongst the various financial institutions right now heading into the new year. Just yesterday, we covered the top ten investment themes for 2010 and how to play them. We've also detailed the top ten stocks held by hedge funds as well. Today we drill it down to specific stock picks for the new year courtesy of Raymond James. As always, take everything with a grain of salt as these reflect their own opinions. Without further ado, here's the list:


Analysts' Best Picks for 2010

1. Aflac (AFL)
2. Alpha Natural Resources (ANR)
3. Altera Corporation (ALTR)
4. Bank of America (BAC)
5. Best Buy (BBY)
6. Chevron (CVX)
7. Concho Resources (CXO)
8. CVS Caremark (CVS)
9. FLIR Systems (FLIR)
10. National Oilwell Varco (NOV)
11. Nuance Communications (NUAN)
12. Sybase (SY)
13. TD Ameritrade (AMTD)
    

Let's dive into some specifics regarding each of their picks:

Aflac (AFL): Raymond James likes Aflac because they feel there is room for growth from supplemental health insurance products. Additionally, they fancy AFL's entrance into the group market. Overall, they feel they will see continued long-term demand. Finally, RJ writes, "Our price target of $60, established on October 29, assumes a normalized P/E on our 2010 EPS expectation of 11.7x less expected investment losses of $2.35 per share. The normalized P/E target is a 20% discount to the then current S&P 500 P/E of 15.6x based on a mean 2010 EPS estimate of $71.17."

Alpha Natural Resources (ANR): Their pick here is based on valuation as well as leverage to the metallurgical coal market, an area that is strengthening. They are also well diversified in other areas and have a solid balance sheet. RJ's main thesis here is valuation based as they write, "Our $52.00 target price factors in our target multiples on the various metrics including 15x P/E ratio, 7.5x P/CF, and 7x EBITDA, which fit within the historical trading ranges of ANR, along with a long-term DCF analysis. Note that this does not include any value for the ~330 Bcf of natural gas reserves, which we believe is easily worth another $5.00 per share, with upside over time through its Marcellus acreage."

Altera (ALTR): Raymond James has selected Altera due to their positioning to capitalize on programmable logic devices (PLDs). They think ALTR will outpace the semiconductor industry in growth by 2x over the course of the next few years. Their analysts write, "ALTR shares remain one of our favorite ideas with a 12-month price target of $29, based on a 23x target P/E multiple to our 2011 EPS estimate of $1.25. This multiple is a slight premium to the shares' 21x historic P/E average over the last three years, which we believe is conservative given Altera's solid business model and leadership in the industry."

Bank of America (BAC): Their tagline on this stock is simply "superior upside potential." As we have covered previously, numerous hedge funds agree as BAC is one of the most popular stocks amongst hedge funds. Analysts at Raymond James feel an oligopoly has emerged in US banking and BAC is right up there with the best in risk-based pricing as they write, "Trading at only 69% of book value and 131% of tangible book value compared to the recent industry averages of 114% and 164%, respectively, shares of BAC offer attractive risk/reward pricing and compare favorably to large-cap peers. Bank of America has already received approval to pay back its $45 billion in TARP funds and we believe a CEO announcement is imminent, both of which should receive a favorable response from the Street."

Best Buy (BBY): RJ's analytical team feels Best Buy can continue to capitalize on the demise of Circuit City as they will continue to gobble up market share, expanding returns. Improving operating margins and an increasing consumer base is boosting BBY's performance and they feel management is one of the best in consumer electronics. RJ writes, "Our $52 price target was reached by placing a ~15x multiple on our FY11 EPS estimate of $3.45, which represents a 16.7% discount to its historical three-year average of 18x."

Chevron (CVX): Chevron is the 'best positioned' among the integrated oil plays, RJ says. This is due to their above average oil focus, their drill-bit track record as they have the highest resource replacement rate, and lastly their small refining segment which should benefit them as they feel those with large exposure to refining will suffer going forward. Raymond James' analysts write, "Quite simply, we believe Chevron should be a core long-term holding for energy investors. Our $92.00 target price is based on ~11.6x our 2010 EPS estimate of $7.92, a slight discount to the mean 2000-2009 P/E. Inclusive of the current 3.5% dividend yield, our target price implies total return potential of 18%."

Concho Resources (CXO): Their pick here is mainly due to high returns in the Permian Basin as the vast majority of their revenues are tied to the price of oil. Of CXO, RJ's analysts say, "Concho generates some of the highest cash margins in our E&P group. One of the company’s core plays, the Yeso, generates an 80% internal rate of return at $70/Bbl oil. Concho is also one of the best in the entire E&P universe on production growth per debt-adjusted share (~35% vs. 3% for the peer group)."

CVS Caremark (CVS): This selection is based on the fact that CVS's model is not broken and that valuation is still attractive. They argue that the worst is behind this name and that going forward retail tailwinds will be behind them and they will see improvements in their Long's acquisition. Raymond James analysts argue that CVS now has compelling relative valuation and that you could potentially be getting their PBM essentially for free. They write, "With expectations reset, the potential for an improved 2011 selling season, and continued share gains in retail, we believe shares are poised to expand off of these trough valuation levels, especially if management continues to deploy significant levels of FCF to share repurchases. Our $39 price target represents 13x 2011 EPS of $2.95, toward the low end of historic ranges." Back on November 5th on our Twitter account we actually mentioned that Lee Ainslie (hedge fund manager of Maverick Capital) was supposedly very keen on shares of CVS at an investment conference that took place before the recent disappointment. We'll have to see if he still favors it going forward.

FLIR Systems (FLIR): Their bullishness on FLIR is attributed to rising orders and what they deem to be attractive valuation. FLIR is a pure play on thermal imaging and infrared technology, an area with lots of growth potential. They write, "As time progresses through next year and investors value FLIR on 2011 earnings, we believe the stock can reach the $40.00 range as its multiple expands toward the historical average. Our $35.00 target price is a 23x multiple on our 2010 EPS estimate of $1.50, in-line with the firm’s historical average multiple and in-line with peers."

National Oilwell Varco (NOV): This has previously been a hedge fund favorite and now Raymond James feel it will benefit throughout 2010. Their rationale: compelling valuation, free cash flow that is strong, and inorganic growth opportunities. They simply feel this is the best name in the oil service space by writing, "Our target price of $60.00 is based on ~18.5x our 2010 EPS. This valuation is in-line with its oilfield manufacturing peers and represents a more reasonable valuation for the company given its tremendous cash position, decent yield, and excellent growth prospects."

Nuance Communications (NUAN): Raymond James feels that speech recognition will be a forcible trend in technology and that Nuance is how you can play it. NUAN is already well positioned in a market that is just now entering the mainstream. Their analysts feel that, "Catalysts for the stock could include: gradual improvement in on-premise enterprise sales and resurgence in enterprise speech growth rates to 10+%, continued large on-demand wins within healthcare, potential benefits from the healthcare stimulus for Dragon Medical, continued new handset and auto wins for mobile, large hosted mobile care wins, and strong cash flow generation."

Sybase (SY): Their analytical team has decided that Sybase actually makes sense in any market environment. However, they have picked it for their 2010 list because it is a recession-resilient business and that they can capitalize on secular growth. RJ says, "Our $49 price target is based on a forward P/E multiple of 19x our 2010 EPS estimate of $2.58. We believe this is justified due to continued license growth, an improving operating margin, and the belief that we will continue to increase our EPS estimates."

TD Ameritrade (AMTD): Rounding out their list of selections, TD Ameritrade makes the cut due to possible catalysts, a solid balance sheet, as well as possible earnings growth should the Fed raise rates during the next year. RJ's analysts write, "TD Ameritrade remains at a discount to peer Charles Schwab (SCHW/$17.88/Outperform), which is currently trading at 21x our 2010 EPS estimate of $0.84 and 14x our 2011 EPS estimate of $1.29."

So there you have it. A few peculiar insertions but some logical ones as well. We'll have to see if their list can outperform the S&P500 yet again this coming year. We've also covered some other research out of Raymond James as we detail their chief investment strategist Jeff Saut's weekly market commentary. You can check out his stock market commentary from this week, as well as his previous market commentary where he feels a weak dollar will drive further market upside.

Comparing their list to the top stocks held by hedge funds, we see very little overlap. However, one stock where they both resoundingly agree is Bank of America (BAC). Tons of hedge funds hold this name and Raymond James has labeled it one of their top picks. For more favored stock picks for the year 2010, check out the top ten investment themes for 2010 as well as the most popular stocks among hedge funds.

Analysts' Best Stock Picks For 2010

*Update: This post has been removed per the request of representatives from Raymond James. Our apologies for any inconvenience. In the mean time, we highly recommend checking out the top ten investment themes for 2010 as well as the most popular stocks owned by hedge funds.

If you wanted more research out of Raymond James, we've also detailed their chief investment strategist Jeff Saut's weekly market commentary. You can check out his stock market commentary from this week, as well as his previous market commentary where he feels a weak dollar will drive further market upside.