Soros Fund Buys Shares in Exa & Sigma Designs

George Soros' family office Soros Fund Management has filed two separate Form 4's with the SEC recently.

Soros Adds To Exa Stake

First, Soros' Form 4 regarding Exa (EXA) indicates that the firm was buying EXA shares on September 11th through 13th.  In total, they acquired 159,500 shares at weighted average price of $14.1881.  After these purchases, Soros now owns over 1.66 million shares of EXA, or 11.07% of the company.

Per Google Finance, Exa is "develops, sells and supports simulation software and services that manufacturers use in design and engineering processes. The Company focuses primarily on the ground transportation market, including manufacturers in the passenger vehicle, highway truck, off-highway vehicle and train markets, as well as their suppliers. Its product, PowerFLOW, is a software solution for simulating fluid flow problems, including aerodynamics, thermal management and aeroacoustics, or wind noise. PowerFLOW uses its Digital Physics technology that enables it to predict fluid flows. PowerFLOW directly simulates unpredictable turbulent scales. The PowerFLOW software suite includes the simulation engine and grid generation engine, along with pre- and post-processing software products. The software is delivered in client/server architecture, or through its cloud-based offering, ExaCLOUD. With the ExaCLOUD solution, various client features and functions are accessed through a Web browser."


Soros Boosts Sigma Designs Stake

Per a Form 4, Soros has also disclosed it acquired 65,625 shares of Sigma Designs (SIGM) on September 12th and 14th at a weighted average price of $5.8562.  After the buys, Soros now owns over 5.08 million shares of SIGM.

Per Google Finance, Sigma Designs is "a provider of global integrated semiconductor solutions. The Company offers media platforms for use in the home entertainment and home control markets. The Company sells its products into markets, including smart television, media connectivity, set-top box and Internet of Things (IoT) devices. The Company's media processor product line consists of a range of functionally similar platforms that are based on integrated chips, embedded software and hardware reference designs. The Company's media connectivity product line consists of wired home networking controller chipsets that are designed to provide connectivity solutions between various home entertainment products and incoming video streams. The Company's IoT devices product line consists of its wireless Z-Wave chips and modules. The Company is engaged in the license of its internally developed intellectual property. It also offers legacy products that are sold into prosumer and other industrial applications."

Soros Fund Boosts Sigma Designs Stake

George Soros' family office Soros Fund Management has filed a Form 4 and 13G with the SEC regarding shares of Sigma Designs (SIGM).  Per the filing, Soros now owns 10.66% of Sigma Designs with over 4.06 million shares.

The Form 4 indicates Soros was buying on April 12th and 13th at a weighted average price of $5.6371.  Their position size is now 2 million shares larger than what it was at the end of January per their previously filed 13G.

Per Google Finance, Sigma Designs is "a provider of global integrated semiconductor solutions. The Company offers media platforms for use in the home entertainment and home control markets. The Company sells its products into markets, including smart television, media connectivity, set-top box and Internet of Things (IoT) devices. The Company's media processor product line consists of a range of functionally similar platforms that are based on integrated chips, embedded software and hardware reference designs. The Company's media connectivity product line consists of wired home networking controller chipsets that are designed to provide connectivity solutions between various home entertainment products and incoming video streams. The Company's IoT devices product line consists of its wireless Z-Wave chips and modules. The Company is engaged in the license of its internally developed intellectual property. It also offers legacy products that are sold into prosumer and other industrial applications."

Soros Fund Ups Quantum Corp Position

George Soros' family office Soros Fund Management has filed a 13G with the SEC regarding its stake in Quantum Corp (QTM).  Per the filing, Soros now owns 5.27% of Quantum with over 14 million shares.

This is up significantly from the 1.66 million shares they owned at the end of the first quarter.  The filing was made due to activity on July 22nd.

Per Google Finance, Quantum Corp "focuses on scale-out storage, archive and data protection, providing solutions for capturing, sharing, managing and preserving digital assets over the entire data lifecycle. The Company's end-to-end tiered storage solutions enable users to maximize the value of their data by making it accessible whenever and wherever needed, retaining it indefinitely and reducing total cost and complexity. It works with a network of distributors, value-added resellers (VARs), direct marketing resellers (DMRs), original equipment manufacturers (OEMs) and other suppliers to meet customers' evolving needs. Its scale-out storage portfolio includes StorNext software, appliances and full systems called StorNext Pro Solutions, as well as Xcellis workflow storage, QXS disk storage, Lattus extended online storage and Q-Cloud Archive and Vault services. Its StorNext offerings enable customers to manage large unstructured data sets in an information workflow."

Soros Fund Boosts Cypress Semiconductor Position

George Soros' family office Soros Fund Management has filed a 13G with the SEC regarding shares of Cypress Semiconductor (CY).  Per the filing, Soros now owns 5.32% of the company with over 17.66 million shares.

This is an increase in their position size as they previously owned 13.2 million shares at the end of the first quarter.  The filing was made due to activity on June 29th.

We recently detailed other portfolio activity from Soros Fund here as well.

Per Google Finance, Cypress Semi is "a provider of mixed-signal programmable solutions. The Company's offerings include PSoC 1, PSoC 3, PSoC 4 and PSoC 5LP programmable system-on-chip families. It caters to markets, including industrial, mobile handsets, consumer, computation, data communications, automotive and military. The Company operates in four segments: Programmable Systems Division, Memory Products Division, Data Communications Division and Emerging Technologies Division. The Programmable Solutions Division designs and develops solutions for end-product manufacturers. The Memory Products Division designs and manufactures SRAM products and non-volatile RAMs (random access memories). The Data Communications Division focuses on solutions for industrial, handset and consumer applications. The Emerging Technologies Division consists of the Company's subsidiaries, AgigA Tech, Inc. and Deca Technologies, Inc."

Soros Fund Boosts MaxLinear Stake

George Soros' family office Soros Fund Management has filed a 13G on shares of MaxLinear (MXL).  Per the filing, Soros Fund now owns 5.19% of the company with over 2.68 million shares.

This marks an increase in their position size of over 1.9 million shares. The filing was made due to activity on May 26th.

Per Google Finance, MaxLinear is "a provider of integrated, radio-frequency (RF) and mixed-signal integrated circuits for broadband communications and data center, metro, and long-haul transport network applications. The Company offers semiconductor products, such as RF Receivers, RF Receiver systems-on-chip (SoCs), Laser Modulator Drivers, Transimpedance Amplifiers, and Clock and Data Recovery Circuits. The Company's products receive and process RF and digital signals and enable the display of broadband video and data content in a range of electronic devices, including cable and terrestrial and satellite set top boxes, data over cable service interface specification (DOCSIS) data and voice gateways, hybrid analog and digital televisions, satellite low-noise blocker transponders or outdoor units, and optical modules for data center, metro, and long-haul transport network applications."

Soros Fund Ups Plasmatech Biopharma Stake

George Soros' family office Soros Fund Management has filed  13G with the SEC regarding shares of Plasmatech Biopharma (PTBI).  Per the filing, Soros Fund has disclosed a 5.17% ownership stake in the company with over 1.16 million shares.

This marks an increase of 916,677 shares since the end of 2014.  The filing was made due to activity on April 22nd.

Per Google Finance, Plasmatech Biopharma is "formerly Access Pharmaceuticals, Inc., is a biopharmaceutical company focused on developing a range of pharmaceutical products primarily based upon nanopolymer chemistry technologies and other drug delivery technologies. The key products for the Company are MuGard, which manages oral mucositis, CobOral, a preclinical nanopolymer for oral delivery of a number of peptides and therapeutics and Cobacyte, its anti-cancer technology to protect normal tissues."

Soros Fund Discloses Exa Corp Stake

George Soros' family office Soros Fund Management has filed a 13G regarding shares of Exa Corp (EXA).  Per the filing, Soros now owns 9.15% of the company with over 1.266 million shares.

This is a newly disclosed equity position for the firm and the filing was required due to portfolio activity on March 9th.

Per Google Finance, Exa Corp is "engaged in developing, selling and supporting simulation software and services that vehicle manufacturer’s use. The Company is primarily focused on the ground transportation market, but is also beginning to focus in the aerospace, oil and gas production, chemical processing, architecture, engineering and construction, power generation, biomedical and electronics industries. The Company’s product suite includes desktop-based simulation preparation products, server-based simulation products and desktop-based simulation analysis products."

Soros Fund Seeks Sale of Penn Virginia

George Soros' family office Soros Fund Management has filed an amended 13D with the SEC on shares of Penn Virginia (PVA).  Per the filing, Soros' Chief Investment Officer Scott Bessent has sent a letter that pushes for a sale of the company. 


Soros Fund's Letter to Penn Virginia

The letter reads:

"June 25, 2014  
Board of Directors
Penn Virginia Corporation
4 Radnor Corporate Center
100 Matsonford Road, Suite 200
Radnor, PA 19087  

Gentlemen and Lady:  

We are extremely disappointed that, as indicated in the letter we received from Mr. Cloues dated June 18, 2014, Penn Virginia Corporation ("Penn Virginia" or the "Company") has rejected our suggestions to provide additional financial incentives to its management team in the event of a sale. We made those suggestions to further align management's interests with the best interests of shareholders, as we have previously communicated to you our belief that you should explore strategic alternatives as a means to maximize shareholder value. We believe that the optimal means to maximize value is for the Company to be sold. By reasserting in the letter your belief in your operating strategy, it appears to us that you are not going to undertake a formal evaluation of Penn Virginia's strategic alternatives.  

As the largest shareholder of Penn Virginia, we are deeply concerned by the Company's recent missteps. Management's presentations at several recent conferences have been underwhelming, culminating in a wholly avoidable revision of its investor presentation type-curve disclosure.1 We believe that these investor relations disasters are the reason why the Company’s stock dropped 14.4% from $16.48 on May 29, 2014 to $14.11 on June 10, 2014, underperforming its peer companies by 15% over that period.2  

In light of this poor stretch of share price performance, which we believe was driven almost entirely by the Company’s disappointing investor-relations effort, we were then astounded by the timing of the June 10, 2014 press release announcing Penn Virginia's proposed private offering of convertible preferred stock. The issuance of this convertible preferred stock was at a significant discount to inherent value and diluted existing equity holders by approximately 21%.3  While the timing of this transaction was particularly egregious, the strategic rationale  

__________________________   1 In presentations, the Company revised down its reported type-curves, showing third-party numbers without explaining to investors the reason behind the decrease. It is common in the E&P industry for third-party type-curve estimates to be lower than company estimates. However, without proper disclosure, this revision was taken by investors as a signal that the Company’s wells had started to deteriorate – which we believe is very much not the case. 2 The SIG Oil Exploration & Production Index (“EPX”) rose 0.6% from 537.04 to 540.00 in the same period. 3 $325mm converts at $18.34/share = 17.72mm shares, versus previous fully diluted share-count of 85.7mm shares.      

was not much better. The Company's intended use for the proceeds of this offering is to finance the acceleration of its development program and increase its lease acquisition effort in the Eagle Ford Shale. Based on management’s own estimates for the present value created by this accelerated drilling program, however, it is clear this decision has destroyed shareholder value.  

We believe that the shares of the Company are fundamentally undervalued, and that issuing equity or equity-linked securities at these prices to accelerate drilling in the manner contemplated fails to optimize per-share value. Other potential owners of this asset have a lower cost of capital and better scale in the Eagle Ford Shale and are clearly its optimal owners. Regrettably, the board’s decision to grow in this dilutive manner indicates to us that it is more interested in “empire building” than maximizing shareholder value.  

The board apparently views this decision as one targeted at building the Company for the long run. But we note that this board of directors has presided over a long period of decline at Penn Virginia, which has resulted in a current stock price that is lower than the stock price ten years ago.4 This record of failure to create value over the long term is not a track record that justifies making dilutive transactions today in the hopes that someday in the future the enhanced scale will somehow benefit shareholders more than a sale today would.  

Again, we believe that the Company should promptly pursue a sale in order to maximize shareholder value. We believe there are numerous potential acquirers who would be interested in acquiring the Company at a material premium to its current trading price, as demonstrated by any number of precedent transactions in the industry. Decisions about the future direction of your development program should be left to the buyers, who enjoy a considerably lower cost of capital and can therefore accelerate drilling in a more accretive manner.  

The time has come for the Company to put itself up for sale as the surest path to maximize shareholder value. Should you fail to start exploring sale alternatives, we reserve the right to take any and all actions we believe necessary to ensure that shareholder value is not further eroded.  

Very truly yours,  

/s/ Scott Bessent
Scott Bessent
Chief Investment Officer"

Soros Fund Discloses Sinclair IS Pharma and Spansion Stakes

George Soros' family office Soros Fund Management has disclosed two new positions recently.


Sinclair Pharma

First, Soros has revealed a new stake in London listed Sinclair IS Pharma (LON:SPH).  Due to trading on May 2nd, Soros now owns 5.02% of Sinclair's voting rights.

Other notable holders of Sinclair Pharma include the Toscafund which was set up by Martin Hughes and is now managed by Johnny de la Hay with 26.8% of voting rights and Lansdowne Partners with 11.03%.

Per Google Finance, Sinclair IS Pharma is "a specialty pharmaceutical company focused on treatments in dermatology, wound care, oncology support and critical care through surface technology and delivery systems. It has presence in five European markets and a marketing partner network across developed and emerging markets."


Spansion (CODE)

Second, Soros Fund has started a new position in Spansion (CODE).  Per a 13G filed with the SEC, Soros has revealed they own 5.11% of the company with over 3 million shares.  This is a brand new position and the filing was required due to activity on April 25th.

Per Google Finance, Spansion is "a designer, manufacturer and developer of Flash memory semiconductors. The Company focuses on a portion of the Flash memory market that relates to flash memory solutions for microprocessors, controllers and other programmable semiconductors that run applications in a range of electronic systems. These electronic systems include automotive and industrial, computing and communications, consumer and gaming. In addition to flash memory products, the Company assist its customers in developing and prototyping their designs by providing software and hardware development tools, drivers and simulation models for system-level integration. Spansion’s products are designed to accommodate various voltage, interface and density requirements for a range of applications and customer platforms. Spansion's product designs are based on its two-bit-per-cell MirrorBit technology and floating gate NOR flash memory technology."

For more, check out George Soros' best investment advice.

Soros Fund Ups Penn Virginia Stake, Files 13D

George Soros' family office Soros Fund Management has filed a 13D with the SEC regarding shares of Penn Virginia (PVA).  Per the filing, Soros has disclosed a 9.18% ownership stake in PVA with just over 6 million shares.

This means they've upped their position by 173,664 shares since the end of 2013.  The filing was required due to activity on March 12th.

The activist 13D filing indicates that they've met with management from time to time regarding "the business, assets, prospects and strategic alternatives and direction."  Soros Fund says the company has been very well managed and think the company should enhance management's financial incentives.  At the same time, the family office believes Penn Virginia should explore strategic alternatives.

You can view additional recent Soros Fund portfolio activity here.

Per Google Finance, Penn Virginia is "an independent oil and gas company engaged primarily in the exploration, development and production of oil, natural gas liquids (NGL) and natural gas in various domestic onshore regions of the United States, including Texas, the Mid-Continent and Mississippi."

Soros Fund Updates Digital River Position

George Soros' family office Soros Fund Management has updated its stake in Digital River (DRIV).  Per an amended 13G filed with the SEC, Soros Fund has disclosed they own 6.97% of Digital River (DRIV) with over 2.47 million shares. 

This is broken down by 16,050 shares and over 2.46 million shares issuable upon the conversion of 2.00% convertible bonds due November 1, 2030.

At the end of 2013, Soros Fund reported aggregate exposure to over 5.5 million shares, so this appears to be a decrease in aggregate exposure by around 3 million shares.  The filing was required due to activity on March 4th.

Soros Fund also filed a Form 4 with the SEC on DRIV and it indicates they received $153,750,000 plus accrued and unpaid interest on the 2.00% convertible bonds they disposed of.

In other activity, Soros Fund also started a Polycom stake recently.

Per Google Finance, Digital River "provides end-to-end global cloud-commerce, payments and marketing solutions to a wide variety of companies in software, consumer electronics, computer games, video games and other markets. The Company offers its clients a broad range of services that enable them to quickly and cost effectively establish an online sales channel capability and to subsequently manage and grow online sales on a global basis while mitigating risks. The Company is engaged in providing outsourced commerce solutions globally to a variety of companies, primarily in the software and consumer electronics product markets. The Company's services include design, development and hosting of online stores and shopping carts, store merchandising and optimization, order management, denied parties screening, export controls and management, tax compliance and management, fraud management, digital product delivery via download, physical product fulfillment and subscription management."

Soros Fund Starts Polycom Stake

George Soros' hedge fund turned family office, Soros Fund Management, has filed a 13G with the SEC regarding Polycom (PLCM).  Per the filing, Soros now owns 6.95% of the company with over 9.4 million shares.

This is a brand new position for the firm and the filing was required due to portfolio activity on January 24th.

Per Google Finance, Polycom is "a provider of unified communications (UC) solutions and a provider of telepresence, video, voice and infrastructure solutions based on open standards. With Polycom RealPresence video and voice solutions, from infrastructure to endpoints, people all over the world can collaborate face-to-face without being in the same physical location. The Company has three operating segments: Americas, which consist of North, Central and Latin Americas; Europe, Middle East and Africa, and Asia Pacific. The products and solutions include Network Infrastructure, UC Group Systems and UC Personal Devices, which includes desktop video devices and wireless local area network products."

For more from Soros himself, head to George Soros' best investment advice.

Soros Fund Boosts Mercury Systems Stake

George Soros' family office Soros Fund Management has filed a 13G with the SEC regarding their stake in Mercury Systems (MRCY).  Per the filing, Soros has revealed a 5.02% ownership stake in MRCY with 1,666,666 shares.

This means their equity stake has increased to the tune of 400,000 shares since the end of the second quarter, or around a 32% boost from their last disclosure.  The latest filing was required due to portfolio activity on October 22nd. 

This has been a longstanding position for Soros as we covered their stake back in 2009, when they owned equity and also convertible notes.

Per Google Finance, Mercury Systems is "formerly Mercury Computer Systems, Inc., designs, manufactures and markets real-time digital signal and images processing sub-systems and software for specialized defense and commercial markets. The Company's solutions are involved in a range of applications, processing and transforming sensor data to information for storage, analysis and interpretation. In military reconnaissance and surveillance platforms, the Company's sub-systems receive, process, and store real-time radar, video, sonar and signals intelligence data. The Company operates in two segments: Advanced Computing Solutions and Mercury Federal Systems."

For more on this firm, head to Soros Fund's recent portfolio activity.

Soros Fund Starts Palace Capital Stake

George Soros’s family office Soros Fund Management has disclosed a new stake in London listed property company, Palace Capital (LON: PCA).

Palace Capital recently raised £23.5m at a placing to buy a portfolio of commercial property assets in England and Wales from Quintain Estates. Quintain are refocusing on London and sold their outside of London assets to Palace.  

Soros’s Quantum Fund took part in the placement taking a 14.87% stake in Palace Capital. 

Per Google Finance – “Palace Capital plc, is a United Kingdom-based investment company. Its   principal activity of the Company is to invest in entities operating within the property sector. The   Company has made an investment in the property arena through its acquisition of Hockenhull   Estates Limited. The Company’s subsidiaries include Equalgold Limited and Hockenhull Estates   Limited. The Company owns the freehold interest in nine commercial properties located in Crewe   and Nantwich, Cheshire which are let under fourteen individual leases. The Company focuses on   the United Kingdom secondary property market outside of London. In October 2013, the Company  acquired Sequel Portfolio from Quintain Estates & Development PLC.”

For more on this legendary investor, check out George Soros' best investment advice.

George Soros on Why We Need to Rethink Economics (Video)

Today we're posting a short interview with legendary investor George Soros.  He's also the co-founder of the Institute for New Economic Thinking and he tackles the question of what's wrong with economics and what can we do to change it?

Embedded below is the video of George Soros on why we need to rethink economics:



While Soros is not involved in the day-to-day affairs, we've posted some of the recent portfolio activity from his family office, Soros Fund Management.

Soros Fund Discloses New Position in SDL Plc

George Soros' family office Soros Fund Management has disclosed a new position in London listed SDL plc (LON:SDL).  Due to trading on June 18th, Soros Fund now own the equivalent of 3.62% of SDL's voting rights.  Approximately 35% of the stake is held via contracts for difference (CFDs).

Per Google Finance, SDL plc is "is engaged in providing global information management solutions     and related software applications to a variety of multinational businesses. The Company operates in three segments: the language services segment, which is engaged in the provision of a translation     service to customer’s multilingual content; the language technologies segment, which is into the     sale of enterprise, desktop and statistical machine technology developed to help automate and     manage multilingual assets together with associated consultancy and other services, and the content  management technologies segment, which is into the sale of content management technologies."

This is the second new position that Soros Fund has disclosed via the London Stock Exchange recently.  We highlighted Soros' new 1Spatial stake last week.

Soros Fund Discloses New Position in 1Spatial

George Soros' family office Soros Fund Management has disclosed a new stake in London listed 1Spatial (LON: SPA).  Due to trading on June 10th,  Soros Fund owns 7.78% of 1Spatial’s voting rights.  This is a brand new position for the firm.     

Per Google Finance – “1Spatial Plc, formerly Avisen plc, is a holding company. The principal activity of the Company is the development and sale of information technology (IT) software along with     related consultancy and support. The Company operates in four segments: Head Office, Avisen,     Storage Fusion and 1Spatial. 1Spatial Holdings plc (1Spatial Business) is a software development     company, which provides location based software and related services. Avisen, the Company’s     management consultancy business, focuses on providing global companies. Storage Fusion is     the author of Storage Resource Analysis (SRA), which provides analytics for enterprise storage     environments through a SaaS service. The Company’s operations are located in the United Kingdom,  Ireland, Australia and Europe. On November 28, 2011, the Company acquired the entire interest of     1Spatial Business. On April 1, 2011, the Company sold its wholly owned subsidiary Inca Software     Limited.”

We've also highlighted other recent portfolio activity from Soros here.

Soros Fund Adds to Johnson Services Stake

George Soros' family office Soros Fund Management has been gradually adding to its position in London listed Johnson Services Group (LON:JSG).  Soros first disclosed the position in July of 2012, but since then they've nearly doubled it.

Soros Fund has revealed they own 7.19% of voting rights in Johnson Services Group as of May 9th.  This is up from 5.68% in March and almost double from their original 3.87% position in July of 2012.

Per Google Finance – “Johnson Service Group PLC provides services to both consumers and     businesses. The Company operates in four segments: Textile Rental, Facilities Management,     Drycleaning and All Other Segments. Textile Rental consists of workwear rental supply and     laundering, linen rental for the hotel, catering and corporate hospitality markets and sale of ancillary     items. Facilities Management includes delivering building, facilities and property management     services to public, commercial and retail organizations throughout the United Kingdom. Dry cleaning     has over 460 stores nationwide, provides dry cleaning, laundry and ironing services, carpet cleaning     and the supply of dry cleaning consumables and equipment. On February 14, 2012, SGP Property     & Facilities Management Limited (SGP), its subsidiary, acquired specified contracts and assets     of Nickleby & Co. Limited. In December 2012, the Company sold Alex Reid Limited (Alex Reid) to     Christeyns UK Limited (Christeyns).”

For more on this investment manager, check out Soros Fund's new position.

Soros Fund Starts J.C. Penney Stake

George Soros' family office Soros Fund Management filed a 13G with the SEC late yesterday afternoon regarding shares of J.C. Penney (JCP).  Per the filing, Soros Fund has revealed a 7.9% stake in JCP with almost 17.4 million shares.

This is a brand new position for the family office as they did not disclose a stake at the end of 2012 in their most recent 13F filing.  The 13G just filed was required due to portfolio activity on April 15th.

CEO Ron Johnson was recently fired from JCP and shares have risen since then.  He was originally recommended by Pershing Square's Bill Ackman and the company will now turn to new management.

We've highlighted how Bill Ackman has a large stake in J.C. Penney and have posted up Ackman's presentation on JCP before.  There's also one coincidence here: both Pershing Square and Soros Fund share the same New York office building address.  Perhaps Ackman recently gave an elevator pitch?

Shares of JCP have fallen from $35 down to around $16 over the past year as they have struggled amidst a turnaround plan involving the company's stores.

Per Google Finance, J.C. Penney is "a retailer, operating 1,102 department stores in 49 states and Puerto Rico as of January 28, 2012. Its business consists of selling merchandise and services to consumers through its department stores and through its Internet Website at jcp.com. It sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products through Sephora inside jcpenney and home furnishings."

Keith Meister's Corvex Management Goes Activist on ADT: Slideshow Presentation

Keith Meister's hedge fund Corvex Management has filed a 13D on ADT (ADT) and has disclosed a 5.02% ownership stake with 11,541,021 shares.  This filing is also made jointly with Soros Fund Management, who have disclosed a 0.25% stake in ADT with 575,000 shares.  The filing was made due to portfolio activity on October 24th.


Corvex's Activist Stake

Keith Meister founded Corvex after working under Carl Icahn for years, so it should come as no surprise that he employs a similar activist strategy.  In the 13D, Corvex notes that they've already had discussions with management about the company's business and strategies and intend to have further discussions.

It's also worth pointing out that the footnotes reveal that Corvex only owns 1,844,021 ADT common shares.  The rest of their stake is broken down in a series of options trades:

- Own call options representing 7,307,000 shares with strike price of $25 and an expiration of 09/30/2013

- Own calls representing 1,065,000 shares with $25 strike and expiration of 10/28/2013

- Own calls representing 750,000 shares with exercise of $42 and expiration of 1/19/2013

- Sold OTC "European-style put options referencing an aggregate of 8,372,000 shares at an exercise price of $25.00 per share, of which 7,307,000 expire on September 30, 2013 and 1,065,000 expire on October 28, 2013 or, in each case, the date on which the corresponding American-style call option described above is exercised."

- Sold open market American-style put options referencing an aggregate of 750,000 shares with an exercise of $36.00 and expiration of January 19, 2013.

Soros Fund Management has also entered into an agreement that allows Corvex to vote Soros' shares as they see fit.


ADT Spun-Out From Tyco

The first thing you need to know is that ADT, a home security business, recently became independently traded as part of the Tyco spin-off.

It appears as though Corvex did not receive any shares in the spin-off and instead purchased the when-issued shares from September 17th through 28th at various dates and also made open market purchases and option purchases post-spin throughout the month of October.


Corvex's Thesis & Presentation on ADT

Meister has laid out an entire presentation on how ADT can improve its business and create more shareholder value.  This presentation was originally given at the Excellence in Investing: San Francisco event on October 24th.

The entire presentation is embedded below, but in summary, he basically believes that ADT is a unique franchise asset and has a defensive & predictable business model with consistent cash flows.  He points to the company's unappreciated secular growth tailwinds and notes its mispricing post-spin (poor capital structure, no public comps, etc).

The crux of his thesis, though, centers around balance sheet optionality.  Meister feels that ADT should increase leverage and improve capital allocation.  He calls ADT a "equity shrink story waiting to happen."


Embedded below is Keith Meister & Corvex Management's presentation on ADT:




For more on this hedge fund, we've also detailed some of Corvex's other activism here.