Hedge Fund Links ~ 3/27/15

How the smart money is set up for a Fed rate hike [CNBC]

New funds blast off with best year since 2004 [HF Intelligence]

Omega Advisors receives federal subpoena [CNBC]

Hedge fund manager: it's a 'truly scary time' [CNBC]

Here are the billionaire hedge fund babies of 2014 [CNBC]

Startups are not hot in the rich hedge fund industry [Forbes]

TigerShark to close down [Bloomberg]

For the Clintons, a hedge fund in the family [NYTimes]

Paul Tudor Jones at TED [TED]

Showtime orders new series 'Billions' about a hedge fund manager [CBS]

Notes From Charlie Munger's Daily Journal Meeting 2015

Charlie Munger's Daily Journal (DJCO) 2015 meeting recently took place.  Alex Rubalcava (@AlexRubalcava) attended and we've aggregated/posted his notes below with permission.


Notes From Charlie Munger's Daily Journal (DJCO) Meeting 2015

Munger on venture capital versus what he does for a living: "It's a really difficult honest way to make a living.  It's not like shooting fish in a barrel, which is how I've made my living."

Software is now a bigger revenue line for DJCO than print and Munger "thinks of it like Jeff Bezos" with its operating losses as it grows.

On the switch from pompous boards to activist investors: "I like the new system even less ... Carl Icahn is a very able man but that doesn't mean he should be running the world."

"I did not succeed in life by intelligence.  I succeeded because I have a long attention span."

"I think that someone my age has lived through the best and easiest period in the history of the world."

Munger referenced The Better Angels of Our Nature by Steven Pinker

"When things are damn near impossible, maybe you should stop trying."

Munger sang the praises of Posco at the meeting and also said that he thinks the moat of American Express (AXP) is less than it once was.

"I think it's very difficult to be a value investor with $200B AUM."

"Other people are trying to act smarter.  I'm just trying to be non-idiotic."

"If the incentives are wrong, the behavior will be wrong.  I guarantee it."

On 3G Capital: "They're teaching us something about reality."

"I don't spend too much time thinking about what is almost certain never to happen."

"The finance industry is 5% rational people and 95% shamans and faith healers."

"A lot of our respected financial institutions are just casinos in drag."

"I don't think anything that any average person can do easily is likely to be worthwhile."

"Before marriage, keep your eyes wide open.  After marriage, keep them half shut."

On how to compete in a service oriented biz: identify things that annoy customers and go down the list and get rid of them

Question about if there are parallels between what's happening in TV with what's happened with newspapers: "I've been a little surprised at how well television has survived, but I'm a little suspicious about the local incumbents."

Munger talked about the Chinese air pollution documentary, "Under the Dome."  He says the ability of P2P communication like that documentary is a cautionary tale for old media.

"Nobody survives open heart surgery better than the guy who didn't need the procedure in the first place."

"Index funds will be permanent owners who can never sell.  That will give them power they are not likely to use well."

If you put a gun to his head and told him he had to buy a tech stock, Munger would pick Google (GOOG)

"Valeant (VRX) is like ITT and Harold Geneen come back to life, only the guy is worse this time."

Munger talked about how Singleton was born smarter than Buffett but Buffett worked harder to learn about investing.

"The way to get rich is to keep $10 million in your checking account in case a good deal comes along."


If you missed it, you can also check out notes from Charlie Munger's Daily Journal meeting last year as well for more wisdom.  Be sure to also read Charlie's letter in the most recent Berkshire Hathaway annual report.

Howard Marks' New Memo on Liquidity

Oaktree Capital's Chairman Howard Marks is out with his latest memo entitled "Liquidity."

Marks outlines the definition of liquidity as the ability to sell something at a price equal or close to the last price.  He also argues that an asset's liquidity can come and go with what's going on in the market. 

He profoundly writes, "In other words, the liquidity of an asset depends on which way you want to go ... and which way everyone else wants to go."

Oaktree's Chairman goes on to write, "The bottom line is unambiguous.  Liquidity can be transient and paradoxical.  It's plentiful when you don't care about it and scarce when you need it most.  Given the way it waxes and wanes, it's dangerous to assume the liquidity that's available in good times will be there when the tide goes out."

Marks also opines about exchange traded funds (ETFs) and liquid alternatives, in an interesting take on how they should be viewed.

Embedded below is Howard Marks' memo on Liquidity:



You can download a .pdf copy here.

If you haven't already, be sure to check out Marks' acclaimed book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor.

Bill Ackman's Pershing Square Annual Report 2014

Bill Ackman's Pershing Square Holdings has released its annual report for 2014.  In it, Ackman highlights how his firm has evolved.  Additionally, he pulls anecdotes from past Pershing Square letters (from inception to the present) to outline their business model, investment strategy, approach to risk management and more.

Embedded below is Pershing Square's 2014 annual report:



You can download a .pdf copy here.

For more on this hedge fund, we posted up some recent portfolio activity from Pershing Square here.

Tiger Global Reduces Bitauto Stake

Chase Coleman and Feroz Dewan's Tiger Global filed an amended 13G with the SEC regarding its position in Bitauto (BITA).  Per the filing, Tiger Global now owns 9.6% of the company with around 6 million shares.

They've reduced their stake by 479,978 shares since the end of the first quarter.  The filing was made due to activity on March 23rd.

Per Google Finance, Bitauto is "a China-based provider of Internet content and marketing services. The Company also distributes its dealer customers’ automobile pricing and promotional information through approximately 600 Internet service provider partners, including Tencent, Netease and Qihoo 360. It operates in four segments bitauto.com advertising business, which offers automakers and dealers a range of advertising services through its Website, and mobile applications; EP platform business, which provides Web-based and mobile-based digital marketing and sales assistant solutions and customer relationship management applications to new automobile dealers in China; taoche.com business, whichprovides listing services to used automobile dealers which display used automobile inventory information on the Website, mobile applications and digital marketing solutions business, which provides automakers with digital marketing solutions."

You can view other portfolio activity from Tiger Global here.

What We're Reading ~ 3/25/15

The psychology of sitting in cash [Wealth of Common Sense]

Problems with "the long-term" [Pragmatic Capitalism]

Discounted cashflow valuations: academic exercise, sales pitch or investor tool? [AD]

25 things learned from Joel Greenblatt about investing [25iq]

The changing and unchanging structure of TV [Stratechery]

Peak cable [Asymco]

The March Madness theory of investing [Bloomberg View]

The world reshaped [The Economist]

Household debt service ratio near record low [Calculated Risk]

The changing state of American fast food [Quartz]

Inside Pinterest, the coming ad colossus that could dwarf Facebook & Twitter [Forbes]

Why this tech bubble is worse than the tech bubble of 2000 [Mark Cuban]

Glenview Capital Q4 Letter on McDonald's, T-Mobile, Auto Dealers & More

Larry Robbins' hedge fund firm, Glenview Capital, is out with its fourth quarter letter to investors. Glenview's Opportunity Fund returned 25.25% net in 2014. 

In the letter, Robbins outlines his thesis on auto dealers (Group 1 Automotive ~ GPI), Flextronics (FLEX), McDonald's (MCD), PHH (PHH), T-Mobile (TMUS), and pharma roll-up plays like Actavis (ACT) and Endo (ENDP).


Glenview's Q4 Letter Takeaways

On McDonald's (MCD):  This is a new stake for Glenview and they feel there's basically 5 ways to make a 'happy meal' to help the company: operational turnaround, SGA rationalization, refranchising, additional leverage, and real estate.  They feel this could trade as high as $169 (currently trades around $99.)

On MCD, Robbins writes, "Fundamentally, McDonald’s has a number of characteristics that we look for in good businesses. Approximately 75% of EBITDA is driven by royalties and rent, which is a secure, stable earnings stream free of operating leverage. Food, in general, is a defensive end market, and McDonald’s positioning at the value end of the spectrum provides further insulation from material cyclicality as evidenced by positive same store sales in the U.S. and positive consolidated EPS growth in every year throughout the last recession."


On T-Mobile (TMUS): Glenview has owned this company since 2013 but bought more shares in December 2014.  They feel the company has a few positive things going for it to continue its growth: aggressively going after new subscribers, deploying spectrum to address new customers, and seeing positive FCF generation this year. 

They also like that the company is a "key strategic asset" and that their parent company Deutsche Telekom is looking to sell.  Glenview feels TMUS could either: try to tie-up with Dish Network and their spectrum, seek a sale to a foreign buyer, or again try to merge with Sprint once a new political administration takes office in 2016.


Embedded below is Glenview's Q4 letter:



For more from this hedge fund, yesterday we posted up some more of Glenview's recent portfolio activity.

Pershing Square Reveals Size of Valeant Investment

Bill Ackman's hedge fund firm Pershing Square Capital Management has filed a 13D with the SEC regarding shares of Valeant Pharmaceuticals (VRX).  Per the filing, Pershing now owns 5.7% of the company with over 19.47 million shares.  The position was assembled via buying common stock and selling put options between February 9th and March 17th.

This is a brand new position for the hedge fund and the filing was made due to activity on March 17th.  We highlighted yesterday how Pershing Square would be participating in VRX's latest offering.  Their ownership percentage above is based on the post-offering amount of shares outstanding.  You can view all of Pershing's recent VRX-related trading activity here.

Based on the number of shares owned, Pershing would be the second largest holder of VRX, behind Ruane Cunniff & Goldfarb (Sequoia Fund) and would hold just slightly more shares than Jeff Ubben's ValueAct Capital.

Pershing's 13D filing also contained the following statement under 'purpose of transaction':

"The Reporting Persons think highly of the Issuer’s management team, strategy, and track record. While the Reporting Persons hold their stake for investment purposes, representatives of the Reporting Persons may continue to conduct discussions from time to time with management of the Issuer, and may conduct discussions with other stockholders of the Issuer or other relevant parties, in each case, relating to matters that may include the strategic plans, strategy, assets, business, financial condition, operations, and capital structure of the Issuer. The Reporting Persons may engage the Issuer, other stockholders of the Issuer or other relevant parties in discussions that may include one or more of the other actions described in subsections (a) through (j) of Item 4 of Schedule 13D. In addition to the foregoing, the Reporting Persons expect to conduct discussions with the Issuer and other relevant parties regarding strategic acquisitions by or joint ventures with the Issuer, or other similar arrangements. These discussions would be exploratory in nature and there is no assurance that they would lead to a definitive transaction."

Per Google Finance, Valeant Pharmaceuticals is "a multinational, specialty pharmaceutical company that develops, manufactures and markets a range of pharmaceutical products."

Farallon Capital Discloses Sky Solar Stake, Adds Board Members At Town Sports

Andrew Spokes' hedge fund firm Farallon Capital has submitted two filings with the SEC recently.

Discloses Sky Solar Stake

First, Farallon filed a 13G regarding shares of Sky Solar (SKYS).  Per the filing, Farallon has disclosed a 7.7% ownership stake in SKYS with 30 million shares.

This is a newly disclosed equity position for the firm and the filing was made due to activity on March 13th.  Sky Solar went public in November 2014.

Per Google Finance, Sky Solar is "independent power producer (IPP) that develops owns and operates solar parks around the world. The Company focuses on the downstream photovoltaic segment of the market."


Adds Board Members At Town Sports International Holdings

Second, Farallon filed an amended 13D with the SEC regarding its stake in Town Sports International Holdings (CLUB).  Per the filing, Farallon now has 2 of the 8 board seats at the company.  Farallon's ownership stake remains unchanged at 16.7% of the company with over 4 million shares.

Per Google Finance, Town Sports is "an owner and operator of fitness clubs in the Northeast and Mid-Atlantic regions of the United States and a fitness club owner and operator in the United States in each case based on the number of clubs. The Company operates 162 fitness clubs under its four regional brand names; New York Sports Clubs (NYSC), Boston Sports Clubs (BSC), Philadelphia Sports Clubs (PSC) and Washington Sports Clubs (WSC)."

Glenview Capital Starts Manitowoc Position, Adds To Brookdale Senior Living

Larry Robbins' hedge fund firm Glenview Capital has filed two separate 13G's with the SEC recently:


Starts New Manitowoc Position

First, Glenview has revealed a 6.34% ownership stake in Manitowoc (MTW) with over 8.6 million shares.  This is a brand new position for the firm and the filing was made due to activity on March 11th.

Readers will recall that activist investor Carl Icahn has pushed Manitowoc to split up.

Per Google Finance, Manitowoc is "a multi-industry, capital goods manufacturer. MTW 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, and cooking needs of restaurants, convenience stores, hotels, healthcare, and institutional applications. Its Crane products are marketed under the Manitowoc, Grove, Potain, National, Shuttlelift, Dongyue, and Crane Care brand names."


Adds To Brookdale Senior Living Stake

Second, Robbins' firm has disclosed a 6.32% ownership stake in Brookdale Senior Living (BKD).  Per the SEC filing, Glenview now owns over 11.59 million shares.

This marks an increase in their position size of over 2.83 million shares since the end of the first quarter.  This filing was made due to portfolio activity on March 12th.

You can view some of Glenview's other recent portfolio activity here.

Per Google Finance, Brookdale Senior Living is "an owner and operator of senior living communities throughout the United States. The Company owns, leases and operates retirement centers, assisted living and dementia-care communities and continuing care retirement centers (CCRCs). The Company has six reportable segments: retirement centers; assisted living; CCRCs – rental; CCRCs – entry fee; Brookdale Ancillary Services; and management services."

Carl Icahn Increases Chesapeake Energy Stake

Activist Investor Carl Icahn has filed an amended 13D with the SEC regarding his stake in Chesapeake Energy (CHK).  Per the filing, Icahn now owns 10.98% of the company with over 73 million shares.

He's increased his position size by 6.6 million shares since the end of the first quarter.  The filing indicates that Icahn was out buying on March 11th at a price of $14.15.

Per Google Finance, Chesapeake Energy is "a producer of natural gas and liquids. The Company’s exploration and production segment is responsible for finding and producing natural gas, oil and natural gas liquids (NGL). The marketing, gathering and compression segment is responsible for marketing, gathering and compression of natural gas, oil and NGL."

You can view some of Icahn's prior portfolio activity here.

Maverick Capital & Odey Out Buying AO World Shares

Lee Ainslie's hedge fund firm, Maverick Capital, has disclosed a holding in London listed online retailer AO World (LON:AO).  Due to trading on March 16th, Maverick hold the equivalent of 3.31% of AO's voting rights via a total return swap.

AO World recently traded around 330p / share and now trades at 182p.  Maverick first disclosed an interest in AO in November 2014 but sold enough shares to go below the 3% disclosure threshold a few weeks later.  You can view other past portfolio activity from Maverick here.

Crispin Odey's firm Odey Asset Management have held AO stock for over a year but due to trading on March 13th, 2015 increased their stake substantially from 5.03% to 10.09%.  About 40% of Odey's holding is held via derivatives.

Per Google Finance, AO World is "an online retailer of domestic appliances. The Company sources, sells and delivers domestic appliances, including washing machines, washer dryers, tumble dryers, dishwashers, refrigerators, freezers, ovens, range cookers and microwaves, as well as a range of small domestic appliances, including vacuums, floor cleaners, coffee machines, mixers and food processors. The Company’s sales activities are focused primarily on sales of appliances through the Company’s branded Websites, principally AO.com. The Company also offers ancillary services to its AO Website and third-party branded Website customers, including delivery, installation, removal and recycling services and sales of third-party product protection plans."

Bill Ackman Set To Increase Valeant Pharmaceuticals Position

Bill Ackman's hedge fund firm Pershing Square took a passive 4.9% stake in Valeant Pharmaceuticals (VRX) according to a statement on March 9th.  And in more recent news, it looks like Ackman is set to increase that stake further.

Valeant recently announced it would sell around $1.45 billion in new shares to fund its takeover of Salix Pharmaceuticals (SLXP).  On the heels of that news, the Wall Street Journal reported the following: 

"Pershing Square Capital Management LP is buying 3 million shares in the offering worth about $600 million, according to a person familiar with the matter.  That would boost Pershing Square's stake in Valeant to above 5%."

Ackman previously worked with VRX to try and takeover Allergan (AGN).  That bid ultimately failed, and Actavis (ACT) scooped up AGN instead. 

In his effort to combine VRX and AGN, Ackman expressed that Pershing was looking to convert its AGN stake into VRX shares if that acquisition happened.  Since it didn't, Ackman simply went out and bought VRX shares instead, as he clearly likes their roll-up business model.

Pershing Square now joins a long list of other hedge funds as large holders of VRX.  As of the end of 2014, top VRX holders included: Ruane Cunniff & Goldfarb (Sequoia Fund), ValueAct Capital, Viking Global, Lone Pine Capital, Brave Warrior, JANA Partners, Maverick Capital, and Hound Partners, among many others.

Eminence Capital Increases GNC Holdings Position

Ricky Sandler's hedge fund firm Eminence Capital has filed a 13G with the SEC regarding its stake in GNC Holdings (GNC).  Per the filing, Eminence now owns 5.2% of the company with over 4.6 million shares.

They've increased their position size by 880,848 shares since the end of the first quarter.  The filing was made due to activity on March 10th.

Per Google Finance, GNC Holdings is "a global specialty retailer of health and wellness products. The Company has three segments: Retail, Franchise and Manufacturing/Wholesale."

You can view previous Eminence portfolio activity here.

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."

Hedge Fund Links ~ 3/20/15

Why hedge funds still make sense for pension funds [NYTimes]

Ray Dalio on the power of not knowing [Institutional Investor]

A mystery in hedge fund investing [NYTimes]

Newcomers jump into activist investing, eying returns and capital [Reuters]

Activist investors can lose even when they get their way [Yahoo Finance]

The smart money's take on a potential Fed hike [CNBC]

Hedge fund investments are getting bigger, weirder, and more creative [IBTimes]

Tiger Consumer to shut down [Bloomberg]

Firm buys stake in JANA Partners [NYTimes]

The impact of the cloud on the hedge fund industry [HedgeWeek]

This is how billionaires enjoy super-low tax rates [CNBC]

Sequoia Fund's 2014 Year-End Letter

Ruane Cunniff & Goldfarb is out with its 2014 year-end letter for its Sequoia Fund.  They returned 7.56% for the year and run a pretty concentrated portfolio of large bets.  At the end of the year, their largest holdings were: Valeant Pharmaceuticals, Berkshire Hathaway, TJX, Fastenal, O'Reilly Automotive, Mastercard, and Idexx Labs.

Their letter also outlines their latest thinking on the above companies, as well as some of their new positions like Richemont, Cabela's, and Constellation Software.

Embedded below is Sequoia Fund's 2014 annual report:



You can download a .pdf copy here.

Lee Cooperman Trims Altisource Portfolio Solutions Stake

Omega Advisors' Lee Cooperman has filed a Form 4 with the SEC regarding his position in Altisource Portfolio Solutions (ASPS).  Per the filing, Cooperman has sold around 262,000 shares.

He was selling on March 16th and 17th at weighted average prices of $16.33 and $15.57.  ASPS has since continued to slide lower and currently trades around $12.73.  We've outlined the ASPS situation here previously.

Per Google Finance, Altisource Portfolio Solutions is "a provider of marketplace and transaction solutions for the real estate, mortgage and consumer debt industries. The Company operates through three business segments: Mortgage Services, Financial Services and Technology Services. The Company offers mortgage services, such as Asset management, Insurance services, Residential property valuation, Default management services and Origination management services. Financial Services provide collection and customer relationship management services to debt originators, servicers and the utility and insurance industries. Technology Services provides software applications and technologies that manage the end-to-end lifecycle for residential and commercial mortgage loan servicing, including the automated management and payment of a distributed network of vendors."

We've detailed other recent portfolio activity from Cooperman here.

Marcato Capital Exits Life Time Fitness

Mick McGuire's hedge fund firm, Marcato Capital Management, has filed an amended 13D with the SEC regarding its stake in Life Time Fitness (LTM).  Per the filing, Marcato no longer holds shares in the company (they previously owned over 3.11 million shares).

The filing was made due to activity on March 16th.  Life Time Fitness recently agreed to a buyout from Leonard Green and TPG in a $4 billion deal.  As such, LTM stock has traded as a risk arbitrage name.  If we were to speculate, Marcato probably saw more attractive uses for their capital, rather than waiting around to capture the deal spread.

For more from this hedge fund, we also recently posted Marcato's presentation on Bank of New York Mellon.

Per Google Finance, Life Time Fitness is "engaged in designing, building, and operating multi-use sports and athletic, professional fitness, family recreation and spa centers in a resort-like environment, principally in residential locations of major metropolitan areas in the United States and Canada."

What We're Reading ~ 3/18/15

The Checklist Manifesto: How to Get Things Right [Atul Gawande]

Ray Dalio warns of 1937-style rate risk [FT]

A dozen things learned from David Tepper about investing [25iq]

Interview with short-seller Marc Cohodes [First Adopter]

In praise of short sellers [New Yorker]

Lumber Liquidators' campaign of distraction and deception [Seeking Alpha]

Crispin Odey says following China could lead to recession [Sydney Morning Herald]

Why the smart money is betting on WWE [First Adopter]

A pitch on Interactive Brokers [Value Venture]

Live Nation Entertainment: an unregulated monopoly? [PunchCardBlog]

A look at Softbank [Institutional Investor]

With the benefit of hindsight [Morgan Housel]

Stock performance before, during, and after recessions [Wealth of Common Sense]

The majority of people are struggling to save for retirement [Wealth of Common Sense]

The future of the four horsemen: Amazon, Apple, Facebook & Google [YouTube]

Consumer behavior across pay-TV, VOD, and OTT [Digitalsmiths]

Zillow, the industry, and reading the tea leaves [Notorious Rob]

MarketFolly's 6th Annual Free March Madness Bracket Contest

College basketball's championship tournament, "March Madness," is finally here.  For the 6th year in a row, Market Folly will be hosting its annual free bracket contest for fellow college basketball fans.  Entry is completely free!


Join Market Folly Madness

To join the free contest, please click this link:
http://marketfolly.mayhem.cbssports.com/e?ttag=BPM15_paste_cbsinv

(If you don't have a CBS Sports account, simply sign up for free)

The password to join the group is: folly


Contest Prizes

1st place: A 1-year subscription to our Hedge Fund Wisdom premium newsletter ($300 value)

2nd place:  A copy of Michael Lewis' most recent book on Wall Street: Flash Boys 

3rd place: A copy of Howard Marks' popular book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor


To be entered into the contest, you must fill out your bracket picks before the main games start this Thursday (March 19th).  Only 1 entry per person allowed.  Good luck!

Children's Investment Fund Boosts Time Warner Cable Stake

Chris Hohn's hedge fund firm, Children's Investment Fund, has filed a 13G with the SEC regarding its stake in Time Warner Cable (TWC).  Per the filing, Children's now owns 5% of the company with over 14.1 million shares.

This means Hohn has increased his position size by over 4.23 million shares since the end of the first quarter.  The filing was made due to portfolio activity on March 6th.

TWC is set to be taken over by Comcast (CMCSA), pending regulatory review.  Hohn must be pretty confident that this deal goes through, though there's no way to know if/how he's hedged out this position.  Even if this deal does fall through, TWC shares likely have a 'floor' as it's been reported that Charter Communications (CHTR) would then be interested in acquiring TWC (something they tried to do previously).

US cable stocks in general also have rallied sharply over the past month on the news that while the FCC has imposed net neutrality, the operators won't be regulated on pricing.  One of the key tenets of the cable investment thesis is that these companies are oligopolies and could have pricing power for their broadband products.  Even if these companies lose video subscribers as customers shift to over-the-top (OTT)/streaming content products, people will still need a (fast) internet connection to receive this content.  

Per Google Finance, Time Warner Cable is "a provider of video, high-speed data and voice services in the United States with clustered cable systems located in five geographic areas including New York State, the Carolinas, the Midwest, Southern California and Texas."

Plymouth Lane Capital Increases Scientific Games Position

Jonathan Salinas' hedge fund firm, Plymouth Lane Capital, has filed a 13G with the SEC regarding its position in Scientific Games Corp (SGMS).  Per the filing, Plymouth Lane now owns 5.5% of the company with over 4.62 million shares.

This means their position size has increased by over 3.66 million shares since the end of the first quarter.  The filing was made due to portfolio activity on March 9th.


About Plymouth Lane Capital

This is the first time this hedge fund has been covered on the site.  Plymouth Lane primarily operates an equity strategy and was launched in April 2013.  Prior to founding Plymouth Lane, Jon Salinas worked at Marble Arch Investments and earned his MBA from Columbia Business School.

At a prior Columbia Business School conference, Salinas noted that you have to focus on the margin of safety if it's an event-driven idea.  But if it's a compounder-type business, he said you have to have high confidence that earnings will compound at the rate expected.  He also mentioned that if you're taking concentrated positions, it's detrimental to let thesis creep go unnoticed.  If evidence contrary to your thesis pops up, you have to be able to recognize it and act.


About Scientific Games Corp

Per Google Finance, Scientific Games is "a developer of technology-based products, services and is a supplier of solutions to lottery and gaming organizations across the world. The Company’s products and services include instant lottery games, lottery gaming systems, terminals and services, and Internet applications, as well as server-based interactive gaming machines and associated gaming control systems. The Company provides products and services, such as instant and draw-based lottery games, electronic gaming machines and game content, server-based lottery and gaming systems, sports betting technology, loyalty and rewards programs, and social, mobile and interactive content and services. The Company operates in three segments: Instant Products, Lottery Systems, and Gaming."

Marcato Capital's Presentation on Bank of New York Mellon

Mick McGuire's hedge fund firm, Marcato Capital Management, has released a letter and presentation to shareholders of Bank of New York Mellon (BK) outlining their thoughts on the company and why they feel a leadership change is in order.

Embedded below is Marcato's letter to BK shareholders:



You can download a .pdf copy of the letter here.


And also embedded below is Marcato's presentation on Bank of New York Mellon:



You can download a .pdf copy of the presentation here.


McGuire is known for taking an activist approach in his investments and this case is no different.  Prior to founding Marcato, he worked at Bill Ackman's Pershing Square, another well known activist investment firm.

Lee Cooperman Increases New Senior Investment Group Stake

Lee Cooperman of Omega Advisors has filed a 13G with the SEC regarding his position in New Senior Investment Group (SNR).  Per the filing, Cooperman now owns 5.13% of the company with over 3.4 million shares.

He's increased his holdings by 803,327 shares since the end of the first quarter.  The filing was required due to activity on March 5th.

We've detailed other recent portfolio activity from Cooperman here.

Per Google Finance, New Senior Investment Group is "a real estate investment trust (REIT) with a portfolio of senior housing properties across the United States. The Company’s portfolio is categorized into two segments: Managed Properties, which are operated by property managers as property management agreements and Triple Net Lease Properties, which the Company lease to tenants. The Company’s managed portfolio includes 42 assisted living, memory care and independent living properties and its triple net lease portfolio includes 57 assisted living, memory care, independent living and continuing care retirement communities."

What We're Reading ~ Hedge Fund Links 3/6/15

Baupost Group on risk management and hedging [ValueWalk]

Hedge funds failing to meet investor expectations, report finds [WSJ]

Which hedge funds investors love - and hate [CNBC]

With correlations so high, why are hedge funds underperforming? [ValueWalk]

Hurdle rate should apply to hedge fund industry as it does in private equity [FT]

Activist investors' success owes much to wider bull run [FT]

Biggest hedge fund run by a woman emerges after Braga spinoff [SwissInfo]

Latest hedge fund strategy to seek higher returns has hit speed bumps [NYTimes]

Hedge funds betting billions on corporate marriages [Forbes]

The strange death of fund of hedge funds [Citywire]

Dan Loeb bets on future Geico of Greece [CNBC]

Loeb sees disappointment for funds seeking energy distress [Bloomberg]

Some stock picks from Locust Wood's Errico [Bloomberg]

Following your boss to his new hedge fund? Think twice [eFinancialCareers]

Hedge funds monetizing by selling stakes to institutional investors [ValueWalk]

Marriage hurts a hedge fund manager more than divorce [CNNMoney]

What We're Reading ~ Analytical Links 3/4/15

12 things learned about investing from Howard Marks [25iq]

Feeling certain and other mistakes that trip up investors [WSJ]

What mistakes investors make and what they learned from it [EndlessriseInvestor]

Why don't we make good investment decisions? [Irrelevant Investor]

Warren Buffett on his early mistakes [Business Insider]

A look at Constellation Software [Value Venture]

A pitch on Cable and Wireless Communications [Scribd]

When will the US have its next recession? [Wealth of Common Sense]

Yahoo's incredible shrinking profitability in its core business [Forbes]

Altice's savvy playbook fuels rapid growth [FT]

Netflix and Google's plan to break out of Equinix's gilded cages [Data Center Knowledge]

Viewers don't add up to profit for YouTube [WSJ]

Is innovation more about people or process? [HBR]

Discount to the London Value Investor Conference 2015

£120 discount code: MARKETFOLLY-MARCH-DISCOUNT

Market Folly has secured a limited number of discounted tickets to the forthcoming London Value Investor Conference 2015, which takes place on 20th May.  This Conference is the largest gathering of Value Investors in Europe and has some of the world's leading investors speaking, including such well-known names as Neil Woodford, Charles Brandes, Jonathan Ruffer, and Dato' Cheah Cheng Hye.  It is also a showcase for less well known and smaller firms.

The speakers will provide valuable insights into the methods and approaches that have made them successful, comment on the current investment climate and offer specific investment ideas.  A key feature of the conference is the 10-15 minutes dedicated to audience Q&A for each speaker, led by Richard Oldfield and David Shapiro.

As part of their presentation, the speakers will give a current investment idea.

In order to claim your special £120 discount on this conference, please use the code "MARKETFOLLY-MARCH-DISCOUNT"

Offer expires March 31st, 2015

Lessons From a Dozen Years of Short Selling

Many investors have called short selling one of the most difficult things to do in finance.  There's potential for unlimited losses, the position sizes get smaller if you're right, and you're constantly going against the crowd and battling waves of optimism.

Kase Capital's Whitney Tilson has put together a presentation entitled, "Lessons From a Dozen Years of Short Selling" that he delivered at Columbia Business School.

In it, he presents both sides of the argument, listing 12 reasons not to short and then 10 reasons to short.

In a recent interview, Tiger Management's Julian Robertson said that it's hard to run a hedged portfolio in a market that seemingly only wants to go up.  But even in an ever-rising market, there will always be frauds and fads, and more often than not, that's what short sellers target.

Embedded below is the full presentation on shorting.



You can download a .pdf copy here. 

For more on the subject, we've also posted up another hedge fund manager's take on short selling.

Jeff Vinik Says Market Not In A Bubble

Jeff Vinik, formerly the portfolio manager of Fidelity's Magellan Fund, recently appeared on CNBC to talk markets.

In the interview, he said that the market's not in a bubble right now, but did acknowledge there's pockets of overvaluation (though nothing like the 1990s.)

Vinik said that, "The economy looks just fine going forward.  It's a good time to be invested ... The economy is cyclical.  The stock market is cyclical.  There will be downturns ... But if you have good companies with strong managements, earnings will grow over time and stock prices will grow."

He said he's a big believer in buy and hold for the long-term.

He also noted his bullishness on the city of Tampa as he lives there now and is working on real estate development and he's the owner of the NHL's Tampa Bay Lightning.  He invited hedge funds to join him down there.

Stan Druckenmiller on Markets, The Fed, & Which Investors He Admires Most

Stanley Druckenmiller, a legendary hedge fund manager (formerly of Duquesne Capital), was interviewed by Kelly Evans on CNBC today and shared his thoughts on the markets and other topics.  Here's some of the key takeaways: 

On the current US markets:  "By historic, fundamental measures, we are extremely high.  Stock market to GDP, which I know is one of Mr. Buffett's favorite measures is probably the highest its been in the last hundred years with an eight month exception around the 1999-2000 period."

He also points to the strong dollar as a headwind for earnings.  He thinks stocks are high by historical measures, but the monetary policy has been so aggressive that they should be high.  He says you should short bonds, not stocks if you think interest rates are going up.

Lastly, he mentioned, "I have positions in the United States, but net-net because of the valuations we talked about and because I'm encouraged by what I'm hearing out of the Fed in terms of them tightening, I'm not all that excited about the U.S."

On the Fed:  He thinks it'd be great if the Fed acts now because he believes there's higher risk in the US economy by acting later.

On which investors he admires most:  He singled out "three lions" he thinks that are talented younger investors who will be considered great one day:  Zach Schreiber at Point State Capital (used to work with Druckenmiller at Duquesne), Chase Coleman at Tiger Global, and Eric Mandelblatt at Soroban Capital (all of which Market Folly covers.) 

On his thoughts on IBM:  He disagrees with Warren Buffett and quoted him saying, "An investor should never let someone else's opinion drive their decision in stocks."  Buffett thinks IBM's problem is cyclical, whereas Druckenmiller thinks its secular.

On foreign markets & positions:  "I just think Europe and Japan are much, much more attractive ... The majority of my long exposure is in Japan and Europe, not in the United States ... You know, a few months ago we started buying the-- I would say global consumer brands who are primarily stable in nature like-- Unilever or Pernod Ricard or L'Oréal. But recently we've shifted into more cyclical names like Volkswagen, BMW, Airbus. When you get the-- you get the tailwind of-- the euro having gone from 140 to 120, which will give them an earnings push in addition at a lower energy. And they are great consumer brand names in and of themselves."

You can read the full transcript of the interview here.

Warren Buffett's Annual Letter: 2014 Berkshire Hathaway Report

Over the weekend, Warren Buffett released his annual letter in Berkshire Hathaway's 2014 annual report.  This is often labeled a 'must read' by investors. 

This letter is somewhat of a 'special edition' in that both Buffett and Charlie Munger give their thoughts on Berkshire over its 50 year history.

It should also be pointed out that Buffett mentions Fred Schwed's book, Where Are The Customers' Yachts: or a Good Hard Look at Wall Street in this letter, so that's probably worth checking out as well.  (You can find the rest of Buffett's recommended reads here.)

Embedded below is Warren Buffett's annual letter for 2014:



You can download a .pdf copy here.

JANA Partners Increases Computer Sciences Stake

Barry Rosenstein's activist hedge fund JANA Partners has filed a 13D on shares of Computer Sciences (CSC).  Per the filing, JANA now owns 5.9% of the company with 8.37 million shares.

JANA has increased its position size by over 5.6 million shares since the end of 2014.  The filing was made due to activity on February 11th.

The filing also notes that JANA has talked with the company about its strategic alternatives.  Over the past six months, various media outlets have suggested the company could be in talks to sell itself to either private equity and/or a foreign company.

We've detailed additional recent portfolio activity from JANA Partners here.

Per Google Finance, Computer Sciences is "a provider of information technology (IT) and professional services and solutions. The Company’s clients include commercial enterprises and the United States federal government, as well as state, local and non-United States government agencies. It has operations throughout North America, Europe, Asia and Australia. The Company operates in three business segments: Global Business Services (GBS), Global Infrastructure Services (GIS), and North American Public Sector (NPS). GBS provides technology solutions including consulting, applications services, and software. GIS provides managed and virtual desktop solutions, unified communications and collaboration services, data center management, cyber security, compute and managed storage solutions. NPS delivers IT, mission, and operations-related services to the Department of Defense, civil agencies of the United States federal government, as well as other foreign, state and local government agencies."

What We're Reading ~ Analytical Links 2/25/15

An interview with The Outsiders author William Thorndike [Joe Magyer]

The extraordinary story of America's most successful industry [Morgan Housel]

Howard Marks: have an approach and hold it strongly [Reformed Broker]

Observations from a decade in the investment business [Wealth of Common Sense]

What is Yahoo worth after the Alibaba spinoff? [MicroFundy]

A look at CDK Global [Scuttlebutt Investor]

The problem with intuitive investing [Wealth of Common Sense]

Profile of SC Fundamental: old school investors [Barrons]

Calculating the odds of a Comcast / Time Warner Cable deal [NYTimes]

The high cost of falling prices [Economist]

Robert Shiller's CAPE ratio recently passed its 2007 high [Twitter]

Americans are borrowing more [WSJ]

Russia's Yandex takes on Google, Android [Barrons]

Millennials ditching their TV sets at a record rate [NYpost]

Capitalism's unlikely heroes: activist investors [Economist]

Profile of one of the most important people at Apple: Jonathan Ive [New Yorker]

Amazon bought this man's company, now he's coming for them [Bloomberg]

Netflix's long-term view [Netflix]

Kingstown Capital Files 13D on Home Loan Servicing Solutions

Michael Blitzer's hedge fund Kingstown Capital has filed a 13D with the SEC regarding shares of Home Loan Servicing Solutions (HLSS).  Per the filing, Kingstown now owns 5.1% of the company with 3.6 million shares.

This is a newly disclosed position for the firm and their 13D indicates that they oppose the announced transaction between the company and New Residential Investment Corp (NRZ).

They write that they "do not believe a transaction at GAAP book value adequately compensates the Issuer's shareholders for the value of its assets, which have historically traded between 1.2x - 1.3x book value according to the Issuer’s September 2014 Investor Presentation.  The Reporting Persons further note the overly conservative nature of the assumptions underlying the Issuer’s book value, including (i) an assumed weighted average prepayment rate of 18% versus the actual 10.3% for the nine months ending September 30, 2014, (ii) an assumed weighted average delinquency rate of 25% versus actual non-performing residential assets of 18.5% of UPB as of September 30, 2014, (iii) an assumed weighted average discount rate of 19% versus a 10% discount rate used by NRZ to value its own MSR assets, and (iv) the exclusion of any value from deferred servicing fees, which were $470M at year-end 2013.      

Kingstown went on to write:

"The Reporting Persons believe that adjusting these assumptions to reflect recently observed rates and the discounted value of deferred servicing fees, among other factors, could add more than $7 per share of additional value above the stated book value.  Notwithstanding a higher offer from NRZ or others, the Reporting Persons believe the most value-enhancing strategies for the Issuer are continuing its servicing relationship with Ocwen Financial Corporation, completing refinancing initiatives recently highlighted by management and executing the Issuer’s growth initiatives as its financing and operations normalize in due course.  The Reporting Persons plan to communicate with the Issuer’s shareholders, management and Board of Directors (the “Board”) as well as other third parties to oppose the current transaction and may present other proposals that offer the Issuer’s shareholders more value. "

Per their 13D, Kingstown was buying HLSS shares throughout January and February at prices ranging from $12.xx to $18.xx.

It's also worth noting that Kingstown holds a large position in Bill Erbey's company Ocwen Financial (OCN) as well (9.5% of the company according to a February 13D filing.) 

They originally started an OCN position in the third quarter of 2014 and were buying on the way down as the company came under siege from the New York Department of Financial Services and regulator Benjamin Lawsky.  This investigation ended with OCN paying a hefty fine and Erbey leaving the company.  Kingstown's 13F filing that details their 2014 year-end portfolio indicated they sold entirely out of their OCN stake.  Then, in a new 13D filing in February, it shows that they started buying OCN again after shares had dropped 50%.

This is worth highlighting due to the fact that both HLSS and OCN have Bill Erbey in common; both are part of the halo of companies he assembled in the mortgage servicing space as HLSS was spun-off from Ocwen a few years ago.  As such, Kingstown's previous work on OCN likely came into play on their HLSS position given the close ties between the companies.

Per Google Finance, HLSS is "a development-stage company. The Company was formed to acquire mortgage servicing assets consisting of mortgage servicing rights, rights to fees and other income from servicing mortgage loans, and associated servicing advances. The Company operates its business as a single reportable segment. HLSS primary source of income is interest income on the Notes receivable – Rights to MSRs. HLSS do not originate mortgage loans, and as a result are not subject to the risk of loss related to the origination of mortgage loans. The Company engaged Ocwen, a residential mortgage loan servicer, to service the mortgage loans underlying HLSS Mortgage Servicing Assets .The Company has not and do not intend to develop its own mortgage servicing platform but instead will rely on high quality third-party residential mortgage loan servicers."

H Partners & Chieftain Capital Both File 13D's on Tempur Sealy

Two investment firms have recently filed 13D's with the SEC regarding shares of Tempur Sealy (TPX).


H Partners Sends Letter to Tempur Sealy's Board 

Rehan Jaffer's hedge fund H Partners currently owns 9.97% of the company with 6,075,000 shares, according to their latest 13D filed with the SEC.  This is the same amount of shares they owned as of the end of 2014 as well.

H Partners runs a highly concentrated portfolio focused on long-term investments.  Prior to founding H Partners, Jaffer worked at Third Point.

The hedge fund also sent a letter to the Tempur Sealy, calling for a new CEO, among other things.  They highlight the company's underperformance and their entire letter is embedded below:




Chieftain Capital Echoes Support

Second, John Shapiro's investment firm Chieftain Capital has filed a 13D on shares of the company as well.  In it, they disclose they own 5.78% of the company with over 3.51 million shares.

They've trimmed their Tempur Sealy position size by around 10% since the end of 2014.  The filing was made due to activity on February 19th and they were selling some shares around $55. 

Chieftain has owned TPX since 2010 and their 13D echoes support for H Partners' proposals for new management and would like to see H Partners get a seat on the board as well.

Per Google Finance, Tempur Sealy is "a bedding provider. The Company develops, manufactures, markets, and distributes bedding products, which it sells globally. The Company operates in three segments: Tempur North America, Tempur International and Sealy. The Company’s brand portfolio includes TEMPUR, Tempur-Pedic, Sealy, Sealy Posturepedic, Optimum, and Stearns & Foster."

New Hedge Fund Wisdom Issue Out Now Featuring Analysis of Colfax (CFX) & American Realty Capital Properties (ARCP)

The brand new Q4 issue of Hedge Fund Wisdom is now available.  Subscribers please login at www.hedgefundwisdom.com to download it.

Included In The New Issue:

• Equity analysis of Colfax Corp (CFX): A 'younger' version of Danaher (DHR) in the making is down 40% from its 52-week high due to macro headwinds.  See which hedge funds like this stock and why.

• Equity analysis of American Realty Capital Properties (ARCP):  Activists have gotten involved with a REIT that has yet to file third quarter financials after going through a transformational acquisition spree.  Catch up quickly on the bull and bear cases.

• The latest portfolios of 25 top hedge funds: New fund added this quarter: Jonathan Auerbach's Hound Partners

• Updated consensus buy/sell lists: Find out which stocks are most popular among hedge funds

To Read The New Issue Immediately, Subscribe Below:  


1-Year Subscription (4 issues): $299.99 per year

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Free Sample Of Our Hedge Fund Wisdom Newsletter: New Issue Out In One Week

As 13F filings start to roll in, a brand new issue of our Hedge Fund Wisdom newsletter will be released in one week.  In the mean time, check out what you've been missing out on.  Embedded below is a free full past issue. 

It features equity analysis on two popular hedge fund bets: Allison Transmission (ALSN) and Armstrong World Industries (AWI).  It also shows you our newsletter format with consensus buy/sell lists, individual manager commentary, and of course the 13F filing summaries.




Free Sample Issue:  Click here to download a .pdf version


Sign Up Below To Receive Next Week's New Issue

A brand new issue will be released next week.  Sign up now so you don't miss it!

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What We're Reading ~ Hedge Fund Links 2/13/14

Stock picks from the Harbor Investment Conference [Business Insider]

This quiet investor has averaged 19% returns for more than a decade [Bloomberg]

Interview with Kyle Bass [RealVision] 

Lone Pine sounds alarm over tech valuations [ii alpha]

Lee Cooperman bullish despite fund loss [CNBC]

Citadel's Ken Griffin gives warning for road ahead [CNBC]

This woman is rocking the hedge fund world [CNBC]

Is gender a factor in fund performance? [FT]

Hedge funds keep winning despite losing [WSJ]

Hedge fund-backed investor puts himself up for GM board [Dealbook]

Why the smart money is running from hedge funds [Marketwatch]

Hedge funds can benefit by using captive insurance companies [Forbes]

Fund pros who live together, buy together [WSJ]

Blackstone's chief has a warning for Wall Street's entrepreneurs [Dealbook]

Nelson Peltz & Trian Partners' Presentation on DuPont

Nelson Peltz's activist investment firm Trian Partners has been involved with shares of duPont (DD) for a little while now and recently released a presentation entitled "A Referendum on Performance and Accountability"

Embedded below is Trian Partners' presentation "DuPont Can Be Great":



You can download a .pdf copy here.

What We're Reading ~ Analytical Links 2/11/15

Henry Singleton's five strategies for business success [ValueWalk]

A list of blogs/financial sites you should be reading [Morgan Housel]

A look at AutoCanada [Value Venture]

A pitch on Graham Holdings [Beyond Proxy]

Meditations on the Eurozone and secession [All About Alpha]

Investment Managers are human too [Squared Away]

Thoughts about risk and portfolio management [Value Venture]

The digital future of TV networks & the original series crunch [Media Redefined]

Zulily: the billion-dollar e-commerce company you know nothing about [Fast Company]

China's biggest problem [Joe Magyer]

Devaluation by China is the next great risk for a deflationary world [Telegraph]

General Motors: saved by the trucks [Economist]

Why Nordstrom's digital strategy works [HBR]

Amaya: is PokerStars a high-quality, high-growth business? [Alpha Vulture]

Baupost Group Starts Bellatrix Exploration Stake, Adds to SunEdison, Reduces Syneron Medical

Seth Klarman's hedge fund firm Baupost Group has filed three 13G's with the SEC.


New Position in Bellatrix Exploration

First, Baupost Group has disclosed a new equity position in Bellatrix Exploration (BXE) and they now own 11.38% of the company with over 21.8 million shares.  The filing was made due to activity on January 31st.

Per Google Finance, Bellatrix Exploration is "a Canada-based company engaged in exploration and production of oil and gas. The Company is focusing on developing its two core resource plays, the Cardium and the Notikewin/Falher intervals. The Cardium is into accumulation of light oil in the Western Canadian Sedimentary Basin with approximately 20,000 square miles and 1.38 Billion barrels produced to date. Notikewin/Falher is located in a regional stacked Upper Mannville Channel. The main type of reservoir is incised channel fill sandstones cutting finer-grained non-marine deposits."


Increases SunEdison Semiconductor Position

Second, Seth Klarman's firm has increased its position in SunEdison Semiconductor (SEMI).  They now own 19.03% of the company with over 7.89 million shares.  This is an increase of over 3.75 million shares since the end of the third quarter and the filing was due to activity on January 31st.

Per Google Finance, SunEdison Semi "is engaged in the development, manufacture and sale of silicon wafers to the semiconductor industry. The Company’s products include polished, epitaxial (EPI), silicon on insulator (SOI), perfect silicon and magic denuded zone (MDZ) wafers ranging in diameter from 100 millimeter (mm) to 300 mm. The Company sells its products to semiconductor manufacturers, including integrated device manufacturers and pure-play semiconductor foundries, and to a lesser extent, companies that specialize in wafer customization."


Decreases Syneron Medical Exposure

Third, Baupost has disclosed a 3.07% ownership stake in Syneron Medical (ELOS) with over 1.12 million shares.  This is a decrease of over 1.86 million shares from their previous stake at the end of the third quarter.  The filing was required due to portfolio moves on January 31st.

Per Google Finance, Syneron Medical "designs, develops and markets aesthetic medical products based on its various technologies including its Electro-Optical Synergy (ELOS), technology, which uses the synergy between electrical energy, including radiofrequency (RF) energy, and optical energy to provide aesthetic medical treatments. The Company’s products, which it sells primarily to physicians and other practitioners, target a range of non-invasive aesthetic medical procedures, including hair removal, wrinkle reduction, rejuvenation of the skin’s appearance through the treatment of superficial benign vascular and pigmented lesions, acne treatment, treatment of leg veins, treatment for the temporary reduction in the appearance of cellulite and thigh circumference and laser-assisted lipolysis."

You can view additional recent portfolio activity from Baupost Group here.

Makaira Partners Trims Capella Education Stake

Tom Bancroft's hedge fund firm Makaira Partners has filed an amended 13G with the SEC regarding their position in Capella Education (CPLA).  Per the filing, Makaira now owns 2.4% of the company with 296,437 shares.

This means they've reduced their position size by 178,420 shares since the third quarter.  The notice was made due to activity on December 31st.

For more from this manager, we just posted up other recent activity from Makaira Partners here.

Per Google Finance, Capella Education is "an online postsecondary education services company. The Company offers doctoral, master’s and bachelor’s programs in the markets. The Company focuses on masters’ and doctoral degrees. The Company targets relevant portions of the adult learner population and provide offerings in demand areas of study such as business and information technology, health care and nursing, social and behavioral science, education and public service leadership. The Company’s support services include: academic services, such as advising, writing, tutoring and research services; administrative services, such as online class registration and transcript requests; library services; financial aid counseling and career counseling services."

Corvex Management Increases ARCP Stake, Writes Letter to Board

Keith Meister's hedge fund firm Corvex Management has filed an amended 13D with the SEC regarding their position in American Realty Capital (ARCP).  They now own 7.8% of the company with exposure to over 70.6 million shares.

This is an increase of over 5.9 million shares since Corvex first reported its ARCP stake in December.  They acquired call options and common stock in late December/early January and sold put options as well.

The activist filing also includes an open letter that Corvex has written to the board of ARCP and to candidates for Chairman and CEO.  You can read the full letter here.

Per Google Finance, American Realty Capital is "a real estate investment trust (REIT). The Company owns and acquires single-tenant, freestanding commercial real estate primarily subject to medium-term net leases with credit quality tenants." 

Phil Hempleman's Ardsley Partners Adds To Bioscrip

Phil Hempleman's hedge fund firm Ardsley Partners has filed a 13G with the SEC regarding their position in Bioscrip (BIOS).  Per the filing, Ardsley now owns 5.1% of the company with over 3.53 million shares.

They've increased their position size by over 1.9 million shares since the end of the third quarter.  The filing was made due to activity on January 29th.

Hempleman founded Ardsley in 1987 and is a long/short equity focused fund that uses bottom-up stockpicking to build its portfolio.  We've covered other portfolio activity from Ardsley here.

Per Google Finance, Bioscrip is "provides home infusion and other home healthcare services. The Company’s services are designed to improve clinical outcomes for patients with chronic and acute healthcare conditions while controlling overall healthcare costs. The Company’s platform provides nationwide service capabilities and the ability to deliver clinical management services that offer patients a high-touch, home-based and community-based care environment. Its core services are provided in coordination with, and under the direction of the patients' physicians."

JANA Partners Completely Exits PetSmart

After going activist on PetSmart (PETM), Barry Rosenstein's hedge fund JANA Partners got the company sold and has been trimming its exposure to the stock since.  Now, in their latest 13D filing with the SEC, we see that JANA has completely exited PetSmart shares.  The filing was made due to activity on February 5th.

As the stock has effectively traded sideways as a risk arbitrage play, one possible explanation is that JANA didn't want to sit around and wait to capture a tiny spread and instead saw more attractive uses for that capital.

PetSmart is set to be acquired by BC Partners in an $8.7 billion deal.

Per Google Finance, PetSmart "supplies products, services and solutions for the lifetime needs of pets. The Company operates a website for pet supplies, foods and different animal needs. The Company's stores also feature pet styling salons that offer pet grooming services, from full-service styling to baths, toenail trimming and teeth cleaning."

Makaira Partners Increases Wesco Aircraft Stake

Tom Bancroft's hedge fund firm Makaira Partners has filed a 13G with the SEC regarding their position in Wesco Aircraft Holdings (WAIR).  Per the filing, Makaira now owns 7.5% of the company with over 7.37 million shares.

This is an increase of over 1.62 million shares since the end of the third quarter.  The filing was made due to portfolio activity on December 31st.  Wesco was already their top holding and they've further increased their stake.

If you're unfamiliar with Makaira, manager Tom Bancroft was listed as one of the people Todd Combs of Berkshire Hathaway would choose when asked who else he would hire.  The other two names were Lou Simpson and Meryl Witmer.   Makaira runs a smaller portfolio, with 10 stocks listed in their Q3 2014 13F filing. 

Per Google Finance, Wesco Aircraft "formerly Wesco Holdings, Inc., a holding company for Wesco Aircraft Hardware Corp. The Company is a distributor and provider of supply chain management services to the global aerospace industry. Its services range from traditional distribution to the management of supplier relationships, quality assurance, kitting, just-in-time (JIT), delivery and point-of-use inventory management."

Third Point Q4 Letter: New Position in Fanuc

Dan Loeb's hedge fund Third Point is out with their fourth quarter letter to investors.  They reveal their thesis on a new long position in Fanuc and touch on their pre-existing long Amgen (AMGN).  Additionally, they highlight general market thoughts and take another look at the situation in Greece.

They've lowered gross and net exposures this year, but are looking to "add exposure during market dislocations."  Their letter notes they're investing in various large cap companies where they can engage with constructive talks with management about improving shareholder value.

Embedded below is Third Point's full Q4 2014 letter:



For more from this manager, be sure to check out Dan Loeb's recommended reading list.

Balyasny Asset Management Starts Peabody Energy Position

Dmitry Balyasny's hedge fund firm Balyasny Asset Management has filed a 13G with the SEC regarding shares of Peabody Energy (BTU).   Per the filing, Balyasny now owns 5.17% of the company with over 14 million shares.

This is a newly disclosed equity position for the firm as they did not own a position at the end of the third quarter.  The filing was made due to activity on January 30th.

Per Google Finance, Peabody Energy "owns interests in 28 active coal mining operations located in the United States and Australia. The Company has a majority interest in 27 of those coal operations and a 50% equity interests in the Middlemount Mine in Australia. The Company also owns a noncontrolling interest in a mining operation in Venezuela. In addition to the Company's mining operations, the Company markets and broker coals from its operations and other coal producers, both as principal and agent, and trade coal and freight-related contracts through trading and business offices. The Company conducts business through four principal segments: Western United States. Mining, Midwestern U.S. Mining, Australian Mining and Trading and Brokerage."

You can view more recent portfolio activity from Balyasny Asset Management here.

Cantillon Capital Exits The Brink's Company Stake

William von Mueffling's investment firm Cantillon Capital has filed a 13G with the SEC regarding shares of The Brink's Company (BCO).  Per the filing, Cantillon no longer holds any shares.

The filing was made due to activity on December 31st.  Previously, they held over 3 million shares of BCO.

Cantillon used to be a hedge fund, but in around five years ago morphed into a long-only firm.  To learn more about this manager, head to von Mueffling's interview with Columbia Business School.

Per Google Finance, The Brinks Company is "a provider of secure logistics and security solutions services ATM replenishment and maintenance, secure international transportation of valuables and cash management services, to financial institutions, retailers, government agencies including central banks, mints, jewelers and other commercial operations around the world. The Company operates in four geographic segments: Latin America; Europe, Middle East, and Africa (EMEA); Asia Pacific, and North America."

Alex Denner's Sarissa Capital Starts Aegerion Pharmaceuticals Stake

Alex Denner's hedge fund firm Sarissa Capital has filed a 13D with the SEC regarding shares of Aegerion Pharmaceuticals (AEGR).  Per the filing, Sarissa now owns 5.76% of the company with over 1.63 million shares.

Prior to founding Sarissa, Denner worked with Carl Icahn and before that was at Viking Global.  Sarissa's focus is the healthcare/biopharma space.

This is a newly disclosed position as Sarissa did not own any AEGR shares at the end of the third quarter.  The disclosure was made due to portfolio activity on January 30th.  They were out buying primarily in the $23-24 range between January 14th and February 4th.

The activist 13D filing notes that Sarissa intends to engage in discussions with management and has the standard boilerplate under the "purpose of transaction" section.

Per Google Finance, Aegerion Pharmaceuticals is "a biopharmaceutical company dedicated to the development and commercialization of innovative therapies for patients with debilitating rare diseases. The Company’s first product, lomitapide, received marketing approval, under the brand name Juxtapid capsules, from the United States Food and Drug Administration as an adjunct to a low-fat diet and other lipid-lowering treatments in adult patients with homozygous familial hypercholesterolemia (HoFH)."