Pennant Capital Discloses Gores Holdings Stake

Alan Fournier's hedge fund firm Pennant Capital has filed a 13G with the SEC regarding Gores Holdings (GRSHU).  Per the filing, Pennant now owns 5.87% of Gores Holdings with 2.2 million shares. 

This is a newly disclosed stake and the filing was made due to activity on July 19th.

Per Google Finance, Gores Holdings is "a blank check company. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Company focuses to effect its business combination using the proceeds held in the Trust Account from its Public Offering and the sale of the Private Placement Warrants, its capital stock, debt or a combination of these as the consideration. The Company has no operations. The Company has not generated any revenue."

Pennant Capital Reduces Universal Stainless & Alloy Stake

Alan Fournier's hedge fund firm Pennant Capital has filed an amended 13G with the SEC regarding its position in Universal Stainless & Alloy (USAP).  Pennant now owns 9.9% of the company with 703,219 shares. 

This is down from the 1.14 million USAP shares they owned at the end of the second quarter.  The filing was made due to activity on October 21st.

As we've highlighted previously, Pennant has been slowly trimming its USAP stake for a while now and shares are down around 56% over the past six months.

Per Google Finance, Universal Stainless & Alloy "manufactures and markets semi-finished and finished specialty steel products, including stainless steel, nickel alloys, tool steel and certain other alloyed steels. The Company's manufacturing process involves melting, remelting, heat treating, hot and cold rolling, forging, machining and cold drawing of semi-finished and finished specialty steels. The Company's products are sold to service centers, forgers, rerollers, original equipment manufacturers (OEMs) and wire redrawers. The Company also performs conversion services on materials supplied by customers. The Company's products are manufactured in a range of grades and melt qualities, including argon oxygen decarburization (AOD), electro-slag remelted (ESR), vacuum induction melting (VIM) and vacuum-arc remelted (VAR)."

Pennant Capital Cuts Universal Alloy Stake Further

Alan Fournier's hedge fund firm Pennant Capital has been gradually selling down its Universal Stainless & Alloy Products (USAP) position.  Per a recently filed Form 4 with the SEC, this is now the second time in recent months that they've trimmed the stake.

Their latest filing shows activity on August 28th, 31st, and September 1st.  In total, they sold 200,534 shares at prices of $13.01 and $13.02.  After these sales, Pennant still owns 849,069 shares of USAP.

We've also highlighted a stock Pennant has been buying lately.

Per Google Finance, "Universal Stainless & Alloy Products "manufactures and markets semi-finished and finished specialty steel products, including stainless steel, nickel alloys, tool steel and certain other alloyed steels. The Company's manufacturing process involves melting, remelting, heat treating, hot and cold rolling, forging, machining and cold drawing of semi-finished and finished specialty steels. The Company's products are sold to service centers, forgers, rerollers, original equipment manufacturers (OEMs) and wire redrawers. The Company also performs conversion services on materials supplied by customers. The Company's products are manufactured in a range of grades and melt qualities, including argon oxygen decarburization (AOD), electro-slag remelted (ESR), vacuum induction melting (VIM) and vacuum-arc remelted (VAR)."

Pennant Capital Increases Manitowoc Position

Alan Fournier's hedge fund firm Pennant Capital has filed a 13G with the SEC regarding its position in Manitowoc (MTW).  Per the filing, Pennant now owns 7.4% of the company with over 10.13 million shares.

This means they've increased their position size by almost 2 million shares.  Pennant previously owned over 8.15 million shares of MTW as of the end of the first quarter.  The filing was made due to activity on July 30th.

Two other prominent investors are also involved in the shares.  Glenview added to its Manitowoc stake back in late April.  Late last year, Carl Icahn also got involved in MTW and pushed for the company to split up, which they've agreed to do.

Per Google Finance, Manitowoc is "a multi-industry capital goods manufacturer. The Company operates in two markets: Cranes and Related Products (Crane) and Foodservice Equipment (Foodservice). Crane is a provider of engineered lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes and boom trucks. Foodservice is a manufacturer of commercial foodservice equipment serving the ice, beverage, refrigeration, food-preparation, holding and cooking needs of restaurants, convenience stores, hotels, healthcare and institutional applications. Its Crane products are marketed under the Manitowoc, Grove, Potain, National Crane, Shuttlelift and Manitowoc Crane Care brand names. Its Foodservice products, services and solutions are marketed under Cleveland, Convotherm, Dean, Delfield, Fabristeel, Frymaster, Garland, Inducs, Koolaire, Kolpak, Kysor Panel Systems and U.S. Range, Lincoln, Manitowoc Ice and Merrychef, among others.."

Pennant Capital Trims Universal Stainless & Alloy Products Position

Alan Fournier's hedge fund firm Pennant Capital has filed a Form 4 with the SEC regarding its position in Universal Stainless & Alloy Products (USAP).  Per the filing, Pennant trimmed its stake in the company slightly on July 30th, 31st, and August 3rd.

In total, the hedge fund sold 60,800 shares at prices of $13.92, $13.74, and $13.06.  After the sales, Pennant still owns 1,082,221 shares of USAP.  Shares of the company are down over 50% year-to-date for 2015.

Per Google Finance, Universal Stainless & Alloy Products "manufactures and markets semi-finished and finished specialty steel products, including stainless steel, nickel alloys, tool steel and certain other alloyed steels. The Company's manufacturing process involves melting, remelting, heat treating, hot and cold rolling, forging, machining and cold drawing of semi-finished and finished specialty steels. The Company's products are sold to service centers, forgers, rerollers, original equipment manufacturers (OEMs) and wire redrawers. The Company also performs conversion services on materials supplied by customers. The Company's products are manufactured in a range of grades and melt qualities, including argon oxygen decarburization (AOD), electro-slag remelted (ESR), vacuum induction melting (VIM) and vacuum-arc remelted (VAR)."

Pennant Capital Raises Ocwen Financial Stake

Alan Fournier's hedge fund firm Pennant Capital has filed a 13G with the SEC on their position in Ocwen Financial (OCN).  Per the filing, Pennant now owns 7.2% of the company with over 9.44 million shares.

This means they've boosted their position size by 4 million shares since the end of the second quarter.  Shares of OCN have been under extreme pressure as regulators scrutinize the non-bank servicers.  They're seeking to beef up compliance and have previously halted OCN's purchase of mortgage servicing rights (MSRs).

The filing was made due to activity on September 22nd. 

Per Google Finance, Ocwen Financial is "a financial services holding company. The Company is engaged in the servicing and origination of mortgage loans. The Company's Shared Appreciation Modification (SAM) incorporates principal reductions and lower payments for borrowers while providing a net present value positive loss mitigation outcome for investors, including the ability to recoup losses if property values increase over time."

Pennant Capital Discloses BFC Financial Position

Alan Fournier's hedge fund firm Pennant Capital has filed a 13G with the SEC regarding shares of BFC Financial Corp (BFCF).  Per the filing, Pennant now owns 3.94% of the company with 2,985,600 shares. 

This is the first time they've disclosed a position in this security.  The filing was required due to portfolio activity on December 4th.

Pennant also recently has decided to return some investor capital.  They join the likes of Baupost Group and Appaloosa Management (where Fournier previously worked) in the ranks of hedge funds that have sent capital back to investors.

Per Google Finance, BFC Financial is "a holding company whose principal holdings include controlling interests in Bluegreen Corporation and BBX Capital Corporation. The Company’s objective is to create long-term value for its shareholders through profitable growth of its portfolio companies and appreciation in the value of its investments. The Company has invested in or acquired businesses in a variety of industries. BBX Capital Corporation is a diversified investment and asset management company. In April 2013, Bluegreen Corporation completes merger with subsidiary of the Company, Woodbridge Holdings, LLC (Woodbridge)."

You can see some of Pennant's other recent trades here.

Pennant Capital Boosts BioScrip & MRC Global Positions

Alan Fournier's hedge fund firm Pennant Capital has filed 2 separate 13G's with the SEC regarding two of their pre-existing positions.


BioScrip (BIOS)

First, Fournier has revealed an increased stake in BioScrip (BIOS).  Per the filing, Pennant now owns 8.44% of the company with 5,737,773 shares.  This is an increase of 250% in their position size since the end of the second quarter.  The filing was made due to activity on October 30th.

Per Google Finance, BioScrip is "a provider of pharmacy and home health services, which partners with patients, physicians, hospitals, healthcare payors and pharmaceutical manufacturers to provide clinical management solutions and the delivery of prescription medications and home health services. Its platform provides service capabilities and the ability to deliver clinical management services, which offers patients a community-based and home-based care environment. Its core services are provided in coordination with, and under the direction of the patient’s physician. Its home health professionals, including pharmacists, nurses, respiratory therapists and physical therapists, work with the physician to develop a plan of care suited to its patients’ specific needs. In August 2013, BioScrip Inc completed the acquisition of the business of CarePoint Partners Holdings LLC and its subsidiaries."


MRC Global (MRC)

Second, the hedge fund also increased its holdings of MRC Global (MRC). Per the 13G filing, Fournier's firm now owns 7.34% of MRC with 7,468,433 shares.  This marks an increase of around 13% since the end of Q2.  The filing was required due to activity on November 7th.

Per Google Finance, MRC is "the distributor of pipe, valves and fittings (PVF) and related products and services to the energy industry. The Company operates in two segments: North American segment and International segment. Its North American segment includes over 180 branch locations, six distribution centers in the United States, one distribution center in Canada, 11 valve automation service centers and over 170 pipe yards located in the oil and natural gas regions in North America. Its International segment includes over 40 branch locations throughout Europe, Asia and Australasia with distribution centers in each of the United Kingdom, Singapore and Australia and 10 automation service centers in Europe and Asia. In July 2013, MRC Global Inc announced that it has completed the previously announced acquisition of the operating assets of Dan H. Brown, Inc., D/B/A Flow Control Products (Flow Control)."

Pennant Capital Reduces Homeserve Position

Alan Fournier's hedge fund firm Pennant Capital has reduced its position in UK traded Homeserve (LON:HSV).  Due to trading on May 22nd, the hedge fund has reduced their position under the 3% disclosure threshold.

Shares of Homeserve fell 29% on May 22nd after the company announced that it was downsizing its operation in the UK in response to a formal investigation by the Financial Services Authority.  On May 19th, the company received a  £750,000 fine over its cold calling practices, the largest fine ever handed out by Ofcom.

While the official notification says that Pennant now hold 2.96% of the voting rights, there's no way to know of further sales as they aren't required to disclose them after falling below that level.

We originally posted about Pennant's new position in Homeserve back on March 6th.  Hedge fund Marathon Asset Management was another previously sizable holder of shares as they reported a 5.24% stake back in November 2011.

Per Google Finance - "Homeserve plc provides home emergency and repair services to over 4.9 million customers across the United Kingdom, the Unites States of America, France and Spain. Services are provided through its membership businesses, which are responsible for the marketing and administration of over 11 million home repair and appliance warranty policies. The Company operates in five segments: UK, USA, Domeo, Spain and New Markets. "

In other activity from Fournier's fund, we've highlighted how they've been buying Huntington Ingalls Industries.

Hedge Funds Short Neopost SA (NEO.PA)

Market Folly's coverage has expanded into tracking hedge fund positions in UK markets as well as in French markets. Upon digging in the latter's regulatory system, it's clear that four prominent hedge funds have been short Neopost SA traded on Euronext Paris (NEO.PA).

Hedge Funds Short Neopost


Steve Mandel's Lone Pine Capital has been short shares in its Lone Balsam, Lone Sequoia, Lone Spruce, and Lone Cypress investment vehicles. They crossed the threshold that required regulatory disclosure on January 11th, 2012 and revealed a net short position of -0.508% of Neopost's shares.

Cliff Asness' AQR Capital has disclosed a -0.995% short position in Neopost due to crossing the regulatory threshold on March 2nd, 2012. They've shorted it in various funds including their absolute return master account, multi-strategy fund, relative value fund and more. They've been short for a few months and this is a slight decrease in their position as they disclosed a -1.088% short on January 31st, 2012.

Ricky Sandler's Eminence Capital has disclosed a -0.895% short in Neopost due to crossing the threshold on January 3rd, 2012. They've also been short shares as far back as August 2011 when they were short 1.32% of the company's shares. Eminence's position has slowly decreased over the past eight months, though they still maintain a position.

Alan Fournier's Pennant Capital revealed their short position due to activity on October 19th, 2011 where they were short -0.72% of shares. A month prior in September, they were only short -0.5%.

The main takeaway here is that it's highly likely that most still maintain short positions in Neopost given that they have not filed disclosures indicating they've gone below the -0.5% short position threshold (they're required to file then).


Rationale For Shorting Neopost

The thesis behind shorting Neopost is largely a secular decline story. Many hedge funds have invested under the broad theme of transformation from print to digital. They go long the companies pioneering technology and short the companies whose products are in decline (and in some cases heading toward obsolescence).

The decline in traditional postal mail somewhat falls under this theme as fewer pages/documents are printed and mailed, instead being stored and transferred digitally.

U.S. First Class mail has seen a decline in volume of over 5% annually over the past four years. Not to mention, it's been in the news that the US Postal Service was potentially facing bankruptcy.

Per Google Finance, Neopost is "a France-based company engaged in the provision of solutions for the mailing and logistics sectors. The Company rents, leases and markets mailing equipment, document and logistics systems, and supplies customized mail processing solutions for letters and parcels to a range of customers in the corporate sector."

Neopost is the second largest provider of postage meters in the US, behind only Pitney Bowes (PBI). Given that physical mail is in secular decline, it should come as no surprise that some hedge funds in the past have disclosed put positions on PBI in their 13F filings with the SEC as well.

Neopost is going after PBI's business by releasing a lower-end postage meter for the US market. Competition in the industry as a whole is heating up as Stamps.com (STMP) offers e-postage as well.

Hedgies are willing to pay Neopost's 3.7% dividend (shorts must pay the dividend normally received by longs) because they believe gains from the decline in share price will more than outweigh these carrying costs. Shares of Neopost have largely traded in a range between €48-58 over the past six months (NEO.PA currently trades at €51.xx).

In summary, it seems hedge funds are betting against Neopost largely as a way to play the secular decline in physical mail.

Alan Fournier's Pennant Capital Starts HomeServe Position

Alan Fournier's hedge fund Pennant Capital disclosed a new position in HomeServe (LON:HSV) traded in the UK.

On March 2nd, 2012, Pennant crossed the 3% ownership threshold required for regulatory notification. The hedge fund now owns over 9.7 million shares of HSV. They have over 10.6 million in voting rights which is equivalent to a 3.24% stake.

We've detailed the rest of Pennant's portfolio in the latest issue of our Hedge Fund Wisdom newsletter that was just released.

Per Google Finance, HomeServe "provides home emergency and repair services to over 4.9 million customers across the United Kingdom, the Unites States of America, France and Spain. Services are provided through its membership businesses, which are responsible for the marketing and administration of over 11 million home repair and appliance warranty policies."

We've also detailed how Pennant has been active in shares of Huntington Ingalls Industries.

Alan Fournier's Pennant Capital Buys More Huntington Ingalls Industries (HII)

Alan Fournier's hedge fund firm Pennant Capital filed an amended 13G with the SEC regarding its position in Huntington Ingalls Industries (HII). Per the new filing, Pennant now owns 8.91% of HII with 4,347,499 shares.

This marks a boost of almost 59% in their position size due to trading activity on January 31st, 2012.

Pennant started a new stake in Huntington Ingalls in late November of last year, originally purchasing 2,734,343 shares and they've clearly continued to build their position.

About Pennant Capital

Alan Fournier founded Pennant after working at David Tepper's Appaloosa Management where he was responsible for the global equity portfolio. He graduated from Wentworth Institute of Technology's Mechanical Engineering program.

About Huntington Ingalls Industries

Per Google Finance, HII "designs, builds and maintains nuclear and non-nuclear ships for the United States Navy and Coast Guard, and provides aftermarket services for military ships around the globe. HII’s business divisions are Ingalls Shipbuilding and Newport News Shipbuilding (NNS). Ingalls Shipbuilding has the development and production of warships for the surface Navy fleet, United States Coast Guard, United States Marine Corps, and foreign and commercial customers."

Alan Fournier's Pennant Capital Buys More Universal Stainless & Alloy Products (USAP)

Alan Fournier's hedge fund Pennant Capital filed an amended 13G with the SEC regarding their position in Universal Stainless & Alloy Products (USAP). In it, they disclose a 10.04% ownership stake in USAP with 685,770 shares.

This marks a 27% increase in their position size since the end of the second quarter when Pennant owned 538,400 shares. We've covered the rest of Pennant's holdings in our Hedge Fund Wisdom newsletter.

About Pennant Capital

Prior to founding Pennant Capital, Alan Fournier was responsible for the global equitiy portfolio for David Tepper's Appaloosa Management. He pursues a long/short equity strategy and graduated from Wentworth Institute of Technology's Mechanical Engineering program.

About Universal Stainless & Alloy Products

Per Google Finance, Universal Stainless & Alloy Products is "manufactures and markets semi-finished and finished specialty steel products, including stainless steel, tool steel and certain other alloyed steels. The Company’s manufacturing process involves melting, remelting, heat treating, hot and cold rolling, machining and cold drawing of semi-finished and finished specialty steels. The Company’s products are sold to rerollers, forgers, service centers, original equipment manufacturers (OEMs) and wire redrawers."