Bridger Capital Discloses ChannelAdvisor Stake

Roberto Mignone's hedge fund Bridger Capital has filed a 13G with the SEC regarding shares of ChannelAdvisor (ECOM). Per the filing, Bridger has disclosed they own 6.8% of the company with 1,670,993 shares.

This is a newly disclosed equity stake and the filing was made due to activity on July 22nd.  You can view other portfolio activity from Bridger this year here.

Per Google Finance, ChannelAdvisor is "a provider of software-as-a-service, or SaaS, solutions that enables retailers and manufacturer customers to integrate, manage and optimize their merchandise sales across hundreds of online channels. Through the Company’s platform, the Company enables its customers to connect with new and existing sources of demand for their products, including e-commerce marketplaces, such as eBay, Amazon and Newegg, search engines and comparison shopping websites, such as Google, Microsoft’s Bing, and Nextag, and emerging channels, such as Facebook and Groupon."

JANA Partners Again Calls For PetSmart To Explore A Sale

Barry Rosenstein's hedge fund JANA Partners has filed an amended 13D with the SEC regarding their activist position in PetSmart (PETM).  Per the filing, JANA has sent an additional letter to the board, urging them to explore a sale of the company.  You can view the first letter JANA sent here. 

Below is the second letter Rosenstein has sent:

"August 4, 2014  
Board of Directors
PetSmart, Inc.
19601 North 27th Avenue
Phoenix, Arizona 85027
Attention: David K. Lenhardt, President and Chief Executive Officer  

Ladies and Gentlemen,  

As you know, JANA Partners LLC (“we” or “us”) and other shareholders have called upon PetSmart, Inc. (“PetSmart” or the “Company”) to conduct a review of all strategic alternatives including a sale of the Company. Given PetSmart’s chronic operational underperformance and failure to generate shareholder value, and given significant interest in an acquisition of the Company, it is very likely that such a sale offers the best risk-adjusted return for shareholders. It is becoming clear, however, that rather than fully exploring all potential opportunities, the board of directors (the “Board”) is attempting to prejudice the ultimate outcome of any such strategic review by steering it away from the most likely path to maximum value creation for shareholders.  

First, it appears that PetSmart has sought to create the patently false impression that there is a shortage of interested acquirers. In fact, we are aware that there are multiple interested potential acquirers, all of whom could pay shareholders a meaningful premium. This interest is not surprising given the highly attractive fundamentals of the pet store industry, the turnaround opportunity for skilled operators, the robust financing market available to acquirers, and the successful acquisition of Petco Animal Supplies Inc., whose private equity owners have already earned back more than 1.5x their original investment through dividend recapitalizations and seen the value of their investment climb as Petco continues to take share from PetSmart.  

Second, we have learned that the Board continues to float new proposals for alternate transactions, despite publicly conceding last week that it has not yet engaged with potential acquirers. As shareholders have made quite clear, given the magnitude and certainty of value creation that a sale likely offers, any standalone path must be measured against a potential sale, which the Board cannot do without first fully engaging with potential buyers. Should the Board need any reminders of the risks for an underperforming company that turns a blind eye to interested buyers, it need only look at the example of Borders Book Group, which was the subject of acquisition interest during current PetSmart Board Chairman Gregory P. Josefowicz’s tenure as its Chairman and CEO, yet pursued an ultimately value-destroying standalone path instead.            

In short, we warn the Board not to compound the damage that has resulted from years of underperformance by now ruling out the path that likely represents its single highest and most certain value maximization opportunity. We can assure you that shareholders will hold each and every director responsible, including supporting significant change at the next annual meeting, should the Board conduct anything less than a fulsome review of all options including a sale. Should you wish to discuss this matter further, you may reach us at (212) 455-0900.  

Sincerely,  

/s/ Barry Rosenstein  
Barry Rosenstein
Managing Partner
JANA Partners LLC"

What We're Reading ~ Hedge Fund Links 8/1/14

Lone Pine tells clients loss stemmed from sins of omission [II Alpha]

Profits soaring after disgrace at Cohen's hedge fund [Dealbook]

Politically connected hedge funds earn higher profits [ValueWalk]

Hedge funds bet big on overseas tax deals [WSJ]

On the Buffett versus hedge funds bet [FT Alphaville]

Manager says this 'mania' health stock will fall 90% [CNBC]

Private equity's most consistent performers [aiCIO]

East Coast Asset Management on An Ownership Mindset: Q2 Letter

Christopher Begg's East Coast Asset Management is out with its Q2 letter.  In it, Begg outlines the "value of an ownership mindset and how it plays an integral part in a compounding triumvirate with a good business and an effective operator."

Comparing investing to horse racing, he highlights how it's important to ask certain questions:

"If we bought this business in its entirety, could we put blinders on for five or ten years and feel secure in our investment?  Our level of comfort is simplified by the three key factors of business (horse), operational excellence (jockey), and the timelessness of an owner mindset (owner/trainer)."


Embedded below is East Coast's full Q2 letter:



For more from this firm, check out their previous letter on understanding the mispricing of an investment.

Corsair Capital's Thesis on SeaWorld: Q2 Letter

Jay Petschek and Steven Major's hedge fund firm recently sent out their second quarter letter and in it they include a pitch on SeaWorld (SEAS). 

They see the investment as one with limited downside and an upside of at least $40 per share over the next year.  Corsair feels the company has a great expansion opportunity ahead of it.  They also feel that Blackstone will eventually sell its remaining 20% ownership stake which will remove an overhang on the stock.

You can read Corsair's full investment thesis on SeaWorld embedded below:



For more recent hedge fund letters we've also posted up Greenlight Capital's letter and Third Point's Q2 letter.

Stan Druckenmiller's Presentation at Delivering Alpha Conference

A few weeks ago, we highlighted Stan Druckenmiller's comments at the Delivering Alpha Conference.  Now, CNBC has released the full video of his talk which is worth viewing.

Embedded below is Stan Druckenmiller's presentation at the Delivering Alpha conference:



For more from that event, be sure to also check out Lee Cooperman's stock picks and Larry Robbins' best ideas.

What We're Reading ~ Analytical Links 7/30/14

Bill Gates calls this "the best business book I've ever read" [John Brooks]

6 signs of a good investment process [Clear Eyes Investing]

Rethinking buybacks [CFO]

On Demand Media and Rightside [Buyside Notes]

Why media mergers limit more than competition [NYTimes]

Interview with Liberty Global's Mike Fries & John Malone [WSJ]

On the Liberty Broadband spinoff [Glenn Chan]

Online corporate finance and valuation classes [Aswath Damodaran]

Presentation on Visa: great company at fair price [ValueWalk]

A pitch on Future Bright Holdings [Red Corner]

Investors rush into student loans [CNN Money]

JANA Partners' Letter to PetSmart's Board

Barry Rosenstein's activist hedge fund firm JANA Partners has filed an amended 13D with the SEC regarding their position in PetSmart (PETM).  They currently own 9.8% of the company and are the largest shareholder.

Rosenstein's letter to the board indicates they want the company to begin a "full strategic review which includes engaging with potential buyers."  And if the company doesn't do so, JANA will seek to change up the board at the next annual meeting.

Embedded below is JANA's letter to PetSmart's board:



For more from this fund, head to Barry Rosenstein's thoughts on activist investing.

12 West Capital Discloses NutriSystem Stake

Joel Ramin's hedge fund firm 12 West Capital has filed a 13G with the SEC regarding shares of NutriSystem (NTRI).  Per the filing, the hedge fund now owns 5.3% of the company with over 1.5 million shares.

This is a newly disclosed equity stake for the firm and the filing was made due to activity in July 16th. 

You can view other recent portfolio activity from 12 West here.

Per Google Finance, NutriSystem is "a provider of a weight management system. The Company’s customers purchase monthly food packages containing a 28-day supply of breakfasts, lunches, dinners and desserts, which they supplement with dairy, fruit, salad, vegetables and low-glycemic carbohydrate items. Its customers order on an auto-delivery basis (Auto-Delivery), in which it sends a month’s food supply on an ongoing basis until notified by the customer to stop its shipments. Its product offerings also include a combination of its ready-to-go food and its fresh-frozen line of menu items. It sells its weight management program through a direct-to-consumer sales and distribution approach using the Internet and telephone."

Balyasny Asset Management Boosts NuStar Energy Stake

Dmitry Balyasny's hedge fund firm Balyasny Asset Management has filed a 13G with the SEC on NuStar Energy (NS).  Per the filing, Balyasny now owns 5.07% of the company with over 3.95 million shares.

This means their equity stake has increased by over 1.64 million shares since the end of the first quarter.  The filing was made due to activity on July 21st.

Per Google Finance, NuStar Energy is "engaged in the terminalling and storage of petroleum products, the transportation of petroleum products and anhydrous ammonia, and petroleum refining and marketing. NuStar Energy operates in three business segments: storage, transportation, and asphalt and fuels marketing. In February 2014, the Company announced that it has completed the transaction with an affiliate of Lindsay Goldberg LLC, a private investment firm, to divest all of its 50% voting interest in an asphalt joint venture that owns a refinery located in Paulsboro, New Jersey."

Greenlight Capital Q2 Letter: Einhorn Reveals Lam Research Stake

David Einhorn's hedge fund Greenlight Capital was up 7.9% net in the second quarter and is up 6.4% for the year.  In their Q2 letter, Greenlight reveals a new position in Lam Research (LRCX).

They see the company as a beneficiary as the process of converting semiconductor designs into chips becomes harder to do.

Greenlight also bought a stake in Mallinckrodt (MNK) but reversed course and sold the stake due to their negative stance on Questcor (QCOR), a company MNK has agreed to purchase.  Greenlight thinks the combined company "is setting itself up to be a very attractive short sale candidate if the merger is completed."  The letter notes that Greenlight was short QCOR.

During the quarter, the hedge fund also sold out of its longs in Aspen Insurance (AHL) and Rite Aid (RAD) at nice gains.

At the end of Q2, Greenlight's largest positions (in alphabetical order) were: Apple (AAPL), gold, Marvell Technology (MRVL), Micron Technology (MU), Resona Holdings (TYO:8308) and SunEdison (SUNE).

Embedded below is Greenlight's Q2 letter with commentary on more of their positions:

What We're Reading ~ Hedge Fund Links 7/25/14

Glenview keeps the gains going [II Alpha]

Tales of the death of hedge funds have been greatly exaggerated [Ritholtz]

JANA takes new position in Apache [ValueWalk]

Hedge funds, Google and the "right to be forgotten" [HF Intelligence]

The big money still loves hedge funds [CNBC]

Elliott pushes EMC to split off VMware [WSJ]

The solution to the Senate's report on hedge funds tax dodging [Forbes]

Citadel Discloses New Stake in Blackhawk Network

Ken Griffin's Citadel has filed a 13G with the SEC regarding shares of Blackhawk Network (HAWK).  Per the filing, Citadel now owns 5.2% of the company with 653,618 shares. 

This is a brand new position for them and the filing was made due to activity on July 22nd.  HAWK completed its spinoff from Safeway (SWY) earlier this year.

You can view more recent portfolio activity from Citadel here.

Per Google Finance, Blackhawk Network is "a prepaid payment network utilizing technology to offer a range of gift cards, other prepaid products and payment services in the United States and 18 other countries. Its product offerings include gift cards, prepaid telecom products and prepaid financial services products (including general purpose reloadable (GPR), cards and its reload network). In addition, it sells physical and electronic gift cards to consumers through both online distributors and its Website, GiftCardMall.com. It offers gift cards from consumer brands, such as Amazon.com, Applebee’s, iTunes, Lowe’s, Macy’s and Starbucks and from payment networks, such as American Express, MasterCard and Visa."

Odey Reveals Tungsten Corporation Stake

Crispin Odey's Odey Asset Management has disclosed a new position in London listed Tungsten Corporation (LON: TUNG).  Due to trading on July 21st, Odey hold 5.21% of Tungsten's voting rights.

Other large investors in Tungsten include Wellington Management with 5% and GLG Partners with 3.63%.  Tungsten is a relatively young business which floated on AIM back in October 2013.

Per Google Finance, Tungsten "is the holding company of OB10 Limited and its subsidiaries. The Company together with its subsidiaries is engaged in the provision of electronic invoice delivery (e-invoicing) to suppliers and buyers. OB10 Limited provides services, such as e-invoicing, where suppliers can send electronic invoices to their customers, eliminating the need for paper documentation; purchase order services, where buyers can send purchase orders to their suppliers; invoice status services, where suppliers can establish the approval and payment status of the invoices they have sent to their customers, and payment services, which includes solutions to enable supply chain financing. The Company operates in European Union, America and Asia."

What We're Reading ~ Analytical Links 7/23/14

In the Plex: How Google Thinks, Works & Shapes Our Lives [Steven Levy]

Importance of ROIC: compounding and reinvestment [Base Hit Investing]

Some thoughts on Twitter [Dan Benton]

LUMA Partners on the future of TV [BusinessInsider]

An old interview with Peter Lynch [PBS]

On the boom in subprime used auto lending [Dealbook]

It's time to split up Microsoft [Stratechery]

Why HBO is such an attractive asset [Quartz]

Sprint planning for lengthy review of T-Mobile deal [Bloomberg]

GMO Q2 Letter: Jeremy Grantham Says Bigger M&A Frenzy Coming

Jeremy Grantham is out with GMO's Q2 letter.  In it, Grantham talks about how he sees a frenzy in mergers and acquisitions coming (on top of the already large number we've seen).

He writes,

"If I were a potential deal maker I would be licking my lips at an economy that seems to have enough slack to keep going for a few years.  Also, individuals and institutions did feel chastened by the crash of 2009 and many are just now picking up their courage.  And as they look around they see dismayingly little in the way of attractive investments or yields.  So, the returns promised from deal making are likely to appear, relatively at least, exceptional.  I think it is likely (better than 50/50) that all previous deal records will be broken in the next year or two.  This of course will help push the market up to true bubble levels, where it will once again become very dangerous indeed."

Grantham feels the M&A boom will continue mainly due to low interest rates, but also because the economy has the 'early-cycle look' that could see a few more years of recovery.  Profit margins are higher this time around and there is room for increased capital spending as well.

All of these things combined create the perfect storm for "a veritable explosion, to levels never seen before."

Embedded below is GMO's Q2 letter:

Maverick Capital Starts Countrywide Plc Stake

Lee Ainslie's hedge fund firm Maverick Capital has disclosed a new position in London listed residential estate agent, Countrywide Plc (LON:CWD).  Due to trading on July 14th, Maverick now hold the equivalent of 3.04% of Countrywide's voting rights, all via total return swap.

Countrywide Plc is the UK's largest estate agency group.  In 2007, the company was taken private by Apollo Management.  In March 2013, it was re-listed on the London Stock Exchange.  Currently, the largest shareholder is Howard Marks' Oaktree Capital with 27.59% of the voting rights.

For more on Maverick, check out an in-depth interview with Lee Ainslie here.

Per Google Finance, Countrywide Plc is "an integrated residential estate agency and property services group in the United Kingdom. The Company offers estate agency and lettings services, together with a range of complementary services. The Company operates in five businesses: residential property sales; residential property lettings and property management; arranging mortgages, insurance and related financial products (provided by third parties) for participants in residential property transactions; surveying and valuation services for mortgage lenders and prospective homebuyers, and residential property conveyance services. Countrywide Holdings, Ltd. is the holding company of the Company."

Alpha Hedge West Conference: 10% Discount

Information Management Network (IMN) is proud to announce that the 20th annual Alpha Hedge West Conference will take place September 21-23, 2014 in San Francisco, California.  The event covers a wide variety of investment management topics and is much broader than other events as it includes speakers from top hedge funds, private equity firms, family offices, capital allocators and more.

Market Folly readers can receive 10% off admission by registering via this link and using the discount code: Folly10


Speakers List

John Burbank, Passport Capital
Ronnie Jaber, Carlyle Group
Kurt Billick, Bocage Capital
Gareth Henry, Fortress Investment Group
John Rohal, Man Group
Christopher Cole, Artemis Capital Management
Brian McQuade, CALPERS Investments
Justin Sheperd, Aurora Investment Management
Rajesh Agarwal, Napier Park Global Capital
Christopher Teets, Red Mountain Capital
Matthew Hepler, Relational Investors
Ken Shubin Stein, Spencer Capital
...and a ton of other speakers too (full list here)


Panel Topics

- State of the Hedge Fund Union
- Adding Value as a Fund of Hedge Funds
- Due Diligence and Monitoring of Hedge Fund Service Providers
- How Are Institutions Using 40 Act as Part of Their Portfolio?
- How To Invest in a Rising Interest Rate Environment
- Activist Strategies
- Under the Radar: Incubators and Investing in Emerging Managers
- Examining the Convergence of the Private Equity and Hedge Fund Business
... and many more (full schedule here)


Discount Code

Remember, to receive 10% off, be sure to click here to register and enter the discount code: Folly10

It should be a fantastic event covering a myriad of topics across the capital allocation spectrum.

Third Point's Q2 Letter on Royal DSM & International Holdings

Dan Loeb's hedge fund Third Point is out with its Q2 letter which focuses on some of their international positions.

They continue to feel that change is coming in Japan and are finding compelling individual investments there (especially with event-driven components).

The letter also details Third Point's investment in Kroton Educacional SA in Brazil, Fibra Uno in Mexico, and Argentinian oil company YPF.

Dan Loeb's fund also writes an in-depth thesis on Royal DSM, a global health company.

Embedded below is Third Point's Q2 letter:


You can download a .pdf copy here.

For more on this hedge fund, you can also view Third Point's Q1 letter.

What We're Reading ~ Hedge Fund Links 7/18/14

Profile of Lee Cooperman [CNBC]

Excerpts from Paulson & Co's latest letter [ValueWalk]

Investors increasingly looking to make hedge fund allocations [COO Connect]

Viking Global preps illiquid investments fund [CNBC]

The top hedge fund in a post financial crisis world is... [II Alpha]

Profile of RenTec's Jim Simons [NYTimes]

KKR doubles down on hedge funds [WSJ]