Scout Capital Discloses New Position in Post Holdings

Adam Weiss and James Crichton's hedge fund firm Scout Capital this week filed a 13G with the SEC regarding shares of Post Holdings (POST).  Per the filing, Scout has revealed a 6.94% ownership stake in the company with 2,266,972 shares.

This is a brand new position for the fund as they did not disclose owning any shares in their last 13F filed with the SEC which detailed positions at the end of the fourth quarter.   Their new disclosure was required due to portfolio activity on April 11th.

Post Holdings was created as a result of a spin-off from Ralcorp Holdings (RAH), which took place at the beginning of 2012 and shares have rallied furiously since then, almost doubling from $24 to current prices just shy of $44.


Other Funds Involved in POST

Parsing through 13F filings from Q4, we see that while a large portion of POST's top holders are 'vanilla' institutional plays, a few hedge funds held Post Holdings at the end of 2012: Paulson & Co and Highfields Capital.  New 13F filings are due out in the middle of May and we'll be able to see who else might have scooped up shares of POST in Q1. 


About Scout Capital

Scout was founded and is co-managed by James Crichton and Adam Weiss. Before founding Scout, Crichton worked at Zweig-DiMenna and received his MBA from Harvard. Weiss, on the other hand, worked at Dan Loeb's Third Point and received his MBA from Columbia. 


About Post Holdings

Per Google Finance, Post Holdings is "a manufacturer, marketer and distributor of branded ready-to-eat cereals in the United States and Canada. The Company’s portfolio of brands includes Honey Bunches of Oats, Pebbles, Great Grains, Grape-Nuts, Shredded Wheat, Raisin Bran, Golden Crisp, Alpha-Bits and Honeycomb. It markets and sells ready-to-eat cereal products in three different categories: sweetened, balanced and unsweetened. Its sweetened products include Pebbles, Honeycomb, Golden Crisp, Alpha-Bits and Waffle Crisp. Its balanced products include Honey Bunches of Oats, Post Selects, Great Grains and Shreddies. The Company’s unsweetened products include Post Shredded Wheat, Post Raisin Bran and Grape-Nuts."

For more on this hedge fund, we've highlighted some of their thoughts on their other positions.

Corvex Management Trims Ralcorp Position

Keith Meister's hedge fund firm Corvex Management filed an amended 13D with the SEC regarding its position in Ralcorp (RAH).  Per the filing, Corvex has disclosed a 3.69% ownership stake in RAH with 2,031,540 shares.

They've reduced their position by selling shares on December 14th, 17th, and 18th at prices around $89.xx.  In total, they've reduced their position size by around 30%, selling 883,456 shares recently.

Corvex originally went activist on RAH in August of this year, arguing that the company should sell itself or merge with another food company, and that's exactly what's happened.

ConAgra last month agreed to acquire Ralcorp for $5 billion.  Shares of RAH currently trade just slightly below the $90 per share offer.  Perhaps Corvex was simply taking money off the table to deploy to more compelling opportunities now.  We've also highlighted how Corvex has gone activist on ADT.

Per Google Finance, Ralcorp is "engaged in manufacturing, distributing and marketing private-brand food products and other regional and value-brand food products in the grocery, mass merchandise, drugstore and foodservice channels. The Company’s products include nutritional bars; snack mixes, corn-based chips and extruded corn snack products; crackers and cookies; snack nuts; chocolate candy; salad dressings; mayonnaise; peanut butter; jams and jellies; syrups; sauces; frozen griddle products, including pancakes, waffles and French toast; frozen biscuits and other frozen pre-baked products, such as breads and rolls; frozen and refrigerated doughs, and dry pasta."

Keith Meister's Corvex Management Takes Activist Stake in Ralcorp

Keith Meister's Corvex Management just filed a 13D on shares of Ralcorp Holdings (RAH) with the SEC.  Per the filing, Corvex now owns a 5.13% stake in the company with 2,835,296 shares. 

Meister founded Corvex after working under Carl Icahn for years and obviously employs a similar activist/event-driven investment strategy. 

The filing was required due to portfolio activity on August 22nd.  This marks an increase of 367% in Meister's position size since the end of June when he owned just over 607,000 shares.


Corvex's Activist Plans For Ralcorp

Meister's firm explains why they've taken an activist stake in Ralcorp in their SEC filing, pointing to the company's strong competitive position in an industry with secular growth (but bad execution). 

Corvex believes Ralcorp should do one of three things:

1. Sell itself
2. Merge with another food company
3. Make changes on the board and implement a new strategy

It's worth pointing out that Ralcorp separated from its Post Cereals business in February of this year and acquired Petri Baking Products and Gelit in May and June, respectively.

In their 13D filing, Corvex writes:

"The Reporting Persons have had meetings and conversations with management of the Issuer to discuss the Issuer’s operations, strategy, and governance and will seek to have additional conversations with one or more of the Issuer’s management, members of the Issuer’s board, other stockholders of the Issuer and other persons to discuss the Issuer’s business, strategies, potential value enhancing actions or transactions and other matters related to the Issuer.

The Reporting Persons believe that the Issuer has a strong competitive position in an attractive industry with secular growth tailwinds but that poor execution has prevented the Issuer’s shares from reflecting full value. The Reporting Persons intend to discuss with one or more of the persons referenced above, among other topics, the Issuer’s performance since rejecting ConAgra’s acquisition offer last year.

Specifically, the Reporting Persons believe that the “status quo” is unacceptable and the Issuer should immediately pursue three alternatives to enhance stockholder value: 1) a sale of the company, 2) a merger with another food company to take advantage of economies of scale and cost synergies or 3) a “self-help” strategy with new investor board representation and a renewed focus on execution, accretive acquisitions and efficient capital allocation. The Reporting Persons intend to express their concern that the Issuer has had several serious execution issues since the Post separation including disappointing earnings, inability to file quarterly financials on a timely basis and poor communication with investors and analysts."


About Ralcorp

 Per Google Finance, Ralcorp is "engaged in manufacturing, distributing and marketing private-brand food products and other regional and value-brand food products in the grocery, mass merchandise, drugstore and foodservice channels. The Company’s products include nutritional bars; snack mixes, corn-based chips and extruded corn snack products; crackers and cookies; snack nuts; chocolate candy; salad dressings; mayonnaise; peanut butter; jams and jellies; syrups; sauces; frozen griddle products, including pancakes, waffles and French toast; frozen biscuits and other frozen pre-baked products, such as breads and rolls; frozen and refrigerated doughs, and dry pasta."


For more on this hedge fund, we've posted up about Corvex's activity in Corrections Corp of America as well.