JANA Partners Exits QEP Resources

Last month, we drew attention to the fact that hedge fund JANA Partners had reduced its QEP Resources stake.  With a newly filed 13D, Barry Rosenstein's activist firm has disclosed that they no longer own a stake in the company.

The filing was made due to activity on October 13th.  Previously, JANA had owned over 12.96 million shares. 

Per their latest 13D filing, JANA sold over 2.3 million shares at $22.50 on October 14th, and really ramped up liquidation of the rest of their stake on October 15th at prices ranging from $20.68 to $21.22.

For more on this hedge fund, just yesterday we highlighted some recent buying activity from JANA in another stock.

Per Google Finance, QEP Resources "operates in three lines of business: gas and oil exploration and production, midstream field services, and energy marketing. It conducted through three principal subsidiaries: QEP Energy Company (QEP Energy) acquires, explores for, develops and produces natural gas, oil, and natural gas liquids (NGL); QEP Field Services Company (QEP Field Services) provides midstream field services, including natural gas gathering, processing, compression and treating services for affiliates and third parties; andQEP Marketing Company (QEP Marketing) markets affiliate and third-party natural gas and oil, provides risk-management services, and owns and operates an underground gas-storage reservoir."

Lee Cooperman's Value Investing Congress Presentation: Are Equities Still the Best House in the Neighborhood?

We're posting up notes from the 2014 Value Investing Congress in New York. Next up is Lee Cooperman of Omega Advisors who presented: Are equities still the best house in the financial asset neighborhood?


Lee Cooperman's Value Investing Congress Presentation

• Market is fully / fairly valued. There is time and price left in us equity bull market and a respectable  S&P return expected in 12-18 months. Repeated the caveat that a geopolitical event could upend this prediction

• “Bear markets are born in despair, grow on skepticism, mature on optimism, die on euphoria.” ‘08/’09 was deep pessimism, have seen skepticism lately but we are near the end of that  now. Sees few signs of euphoria

• Nearly all us fixed income securities w/ exception of structured credit are uninteresting and   unattractive. This includes treasuries, investment grade corporates, HY bonds and soverign debt

• Equity markets in Europe and Japan should deliver respectable returns over coming year, could   outperform us as they are further behind in business cycle. Japanese valuations are attractive   because they have a comparable dividend yield but sell at 13.6x P/E vs. 16.8x P/E in US

• Dollar should be a strong currency over coming year

• Looking at average cycles:
o Bear market of ‘09 was 2x the average bear market, down -57% vs. -26% average. Also lasted 17 months vs. 13 month average
o Recession duration also prolonged and deeper than average. The average recession is characterized by -2% GDP and lasts 10 months.  In the '09 recession, GDP declined -4.3% and lasted 18 months
o Average recovery lasts 60 months and we are on slight overtime at 63 months today. 
o Market peaks about 7 months prior to economic peak. Thinks we don't have recession in 2015 so doesn't see a market peak today
o Cooperman thinks this recovery has the potential to exceed the average because so many companies were operating below potential

• Reason for caution:
o Seeing a lot of capitulation from the permabears, now hearing 3,000 S&P predictions from holdouts.  People waking up and getting bullish now are making a mistake
o Getting a little nervous that so many people who couldn’t see the positive outlook a few years ago now see such good opportunity
o Reiterated geopolitical risk multiple times
o Very concerned about income disparity in the economy. 75mm youth around the world are unemployed.  In the '40s an average factory worker made 1/30th of a CEO, now 1/900th
o Next crisis will be in public sector fundings. US government has $17tn debt with an average maturity < 4 years.  Meanwhile corporates have high liquidity and the banking sector is so highly regulated these days that a crisis probably won't come from them
o Another risk: recession/deflation in Eurozone or US
o Stocks also aren't really cheap – showed Buffett’s favorite stock valuation chart

• Regarding rising rates:  o If Fed doesn't raise rates, we have a problem in the stock market. If cash belongs at 0% and govt belongs at 4%, you shouldn't be making 15% in the stock market.  Rising rates should be indicative of an improving economy
o 1958 was the year of yield reversal when equities started yielding less in dividend yield compared to treasuries.  Now over 25% of S&P 500 non-financials yield more than 10yr note
o Relative to alternatives, equities still better. Fixed incomes just not attractive


Longs:  

• GARP: Actavis (ACT), Citigroup (C), Thermo Fisher (TMO)
• Income growth: Atlas (ATLS), Gaming & Leisure Properties (GLPI), KKR (KKR), Nordic American Offshore (NAO) 
• Asset restructuring: QEP Resources (QEP), Supervalu (SVU)
• High risk/high return: Altisource Portfolio Solutions (ASPS), Louis XIII (577 Hk), Monitise (MONLLN), Sandridge Energy (SD).

Cooperman's pick of ASPS was analyzed in the May issue of our Hedge Fund Wisdom newsletter if you want to play catch up on the name quickly.



Be sure to check out the rest of the Value Investing Congress presentations here.

JANA Partners Trims QEP Resources Stake

Barry Rosenstein's activist hedge fund firm JANA Partners filed an amended 13D with the SEC regarding their position in QEP Resources (QEP).  Per the filing, JANA now owns 7.2% of the company with just over 12.9 million shares.

This means they've reduced their stake by around 2.3 million shares since the end of the second quarter.  The filing was made due to portfolio activity on September 3rd.

JANA's filing notes that they "reduced the size of its investment ... through regular portfolio management activities."  They also say they're "highly supportive of the recent steps taken by (QEP's) board and management, including (QEP's) announcement of the separation of its midstream business and the addition of a board member with midstream energy expertise to assist with the separation."

You can check out more recent portfolio activity from JANA Partners here.

Per Google Finance, QEP Resources "operates in three lines of business: gas and oil exploration and production, midstream field services, and energy marketing. It conducted through three principal subsidiaries: QEP Energy Company (QEP Energy) acquires, explores for, develops and produces natural gas, oil, and natural gas liquids (NGL); QEP Field Services Company (QEP Field Services) provides midstream field services, including natural gas gathering, processing, compression and treating services for affiliates and third parties; andQEP Marketing Company (QEP Marketing) markets affiliate and third-party natural gas and oil, provides risk-management services, and owns and operates an underground gas-storage reservoir."

Lee Cooperman's Favorite Stock Picks at Delivering Alpha Conference

At CNBC and Institutional Investor's Delivering Alpha conference today, Omega Advisors' Lee Cooperman shared his favorite stock picks.

He likes Actavis (ACT), a tax inversion play, Citigroup (C), a good buy he says because the economy is healing with loan demand and one that could narrow the discount to book value over time, as well as Gaming and Leisure Properties (GLPI) and Nordic American Offshore (NAO).

Other plays he likes include: QEP Resources (QEP), Supervalu (SVU), Louis XIII (577 HK), and Monitise (MONI.LN), the mobile payments play he's pitched before.

Lastly, he also mentioned Thermo Fisher Scientific (TMO), KKR (KKR) and Sandridge Energy (SD).

Cooperman also noted that the last time the Fed raised rates was in 2006 and around 25% of fund managers weren't really around to experience that.

He also joked that the last time he was bearish was during his Bar Mitzvah.

One quote that stood out from him was that, "if you buy something that's out of favor, things seem to happen to make you right."


Lee Cooperman will be presenting new investment ideas at the upcoming Value Investing Congress in a few months and readers can receive a discount to the event by registering here and using discount code: MARKETFOLLY

JANA Partners Updates QEP Resources Stake

Barry Rosenstein's activist hedge fund JANA Partners has filed an amended 13D with the SEC updating their stake in QEP Resources (QEP).  Per the filing, JANA now owns 9.4% of QEP with over 16.875 million shares.

This means they've increased their stake by around 3 million shares in January.  At the same time, they also indicated they trimmed their stake ever-so-slightly more recently (from 16.9 down to 16.8 million shares).  We highlighted when JANA first went activist on QEP back in October of 2013.

JANA also entered an agreement with the company where William Thacker joined the board and will serve until QEP separates its midstream business.

Per Google Finance, QEP Resources is "a holding company. The Company operates in three lines of business: gas and oil exploration and production, midstream field services, and energy marketing. It conducted through three principal subsidiaries: QEP Energy Company (QEP Energy) acquires, explores for, develops and produces natural gas, oil, and natural gas liquids (NGL); QEP Field Services Company (QEP Field Services) provides midstream field services, including natural gas gathering, processing, compression and treating services for affiliates and third parties; andQEP Marketing Company (QEP Marketing) markets affiliate and third-party natural gas and oil, provides risk-management services, and owns and operates an underground gas-storage reservoir."

For more on this hedge fund we've posted up JANA's thesis on Equinix from their Q4 letter.

What We're Reading ~ Analytical Links 11/6/13

Individual investor bullishness hits 6 year high [PragCap]

What to do in this market [Brooklyn Investor]

On a consistent and repeatable investment process [Research Puzzle]

Portfolios With Purpose: Stock picking for a cause [WSJ]

The 20 smartest things Jeff Bezos has ever said [Fool]

The bull case on Valeant Pharmaceuticals [Barrons]

Quick glance at Du Pont [Modern Graham]

A look at QEP Resources and Rick's Cabaret [HF Intelligence]

Springleaf Holdings and the re-emergence of subprime consumer lending [CFA]

Take-Two: A compelling value with 2 asymmetric options [First Adopter]

Disney and Dish wrangle not over broadcast fees, but the future of TV [NYTimes]

Can companies maintain their extraordinarily high margins? [WSJ]

Whitney Tilson's observations from his trip to China [Seeking Alpha]

On China's pollution problem [NYTimes]

Ajit Jain feeds Buffett's hunger [Insider Quarterly]

Why Twitter's IPO is a bigger deal than Facebook's [WSJ]

For new MBA's, tech more appealing than Wall Street [WSJ]

JANA Partners Goes Activist on QEP Resources, Sends Letter to Board

Barry Rosenstein's hedge fund JANA Partners has been quite active submitting SEC filings as of late.  The activist investor has revealed their latest target: QEP Resources (QEP).  Per a 13D filed with the SEC, JANA has revealed a 7.5% ownership stake with 13,500,000 shares.

This marks a 55% increase in the number of shares they own since the end of the second quarter.  The filing was made due to activity on October 11th.

JANA was out buying in late August, sporadically throughout September, and then all throughout October at prices ranging from $27.68 to $31.46 and are now the largest institutional shareholder.  However, they've owned QEP shares for over a year.

JANA's Letter to QEP's Board

Rosenstein penned a letter to QEP's board, noting that the company needs to unlock the value of its midstream business.  JANA also wants to see bolt-on M&A and organic project development for growth.  Additionally, the hedge fund calls for more board members and management with proven Midstream experience and to align management incentives.  Lastly, JANA is looking for the company to return capital to shareholders.

Embedded below is JANA Partners' letter to QEP Resources:




For more on this hedge fund, head to a recent interview with JANA's Barry Rosenstein.