Hedge Fund Links ~ 8/4/17

Excerpts from Highfields Capital's letter [Business Insider]

Steve Eisman says financial system 'safe' but worried about Europe's banks [Business Insider]

Thoughts from Dan Loeb on Third Point Re's conference call [CNBC]

Hedge funds turn to dark web to gain an edge [FnLondon]

Paul Tudor Jones clients pull 15% from main hedge fund [Bloomberg]

Fledgling quant funds seek to disrupt Wall Street [FT]

Pershing Square Builds Automatic Data Processing Stake

Recently, Bloomberg reported that Bill Ackman's activist firm Pershing Square Capital Management had built a stake in Automatic Data Processing (ADP).  Then today, Ackman told CNBC that he's "still buying the stock as of this morning" and that he is "not seeking control of the company."

Per Ackman's recent interview, he feels the company can expand profit margins by more than 50%.  Pershing now reportedly owns 8% of the company mainly via derivatives.

Apparently, Ackman was seeking to push back the board nomination window.  ADP responded: "The Board has unanimously determined that it is not in the best interests of ADP or its other shareholders to accede to Pershing Square's last-minute request for an extension."

ADP also appeared to take a dig at Pershing in its statement as well: "Since Carlos Rodriguez became CEO nearly six years ago, ADP's total shareholder return of 202% is well in excess of the S&P 500 TSR of 128% - and is many multiples of Pershing's TSR of 29%."

For more on this fund, we've also highlighted other recent portfolio activity from Pershing Square here.

Per Google Finance, Automatic Data Processing is "a provider of human capital management (HCM) solutions to employers, offering solutions to businesses of various sizes. The Company also provides business process outsourcing solutions. Its segments include Employer Services and Professional Employer Organization (PEO) Services. The Employer Services segment offers a range of human resources (HR) business process outsourcing and technology-enabled HCM solutions. These offerings include payroll services, benefits administration, talent management, HR management, time and attendance management, insurance services, retirement services, and tax and compliance services. ADP TotalSource, ADP's PEO business, offers small and mid-sized businesses a HR outsourcing solution through a co-employment model. As a PEO, ADP TotalSource provides HR management services while the client continues to direct the day-to-day job-related duties of the employees."

Alex Roepers Interview With Capitalize For Kids

Alex Roepers of Atlantic Investment Management sat down with Capitalize For Kids for their Investor Series and talks about his strategy for beating the market while holding only six stocks.  Here's a few excerpts:


On the current markets:  "From a 40,000 foot level,you know the 10-year treasury yield is around 2.4%, while the S&P 500 dividend yield is around 2.1% and the earnings yield is about 5%, based on an index P/E of 17x. So we see the market as not overly cheap for sure but also not overly expensive. The continued low interest environment remains supportive for the overall market.

Within the market of course, you have many different pockets – it is a bit of a barbell, bifurcated market. On one hand, you have Tesla and the other story stocks that have a cult following and valuations that we think make absolutely no sense. On the other hand, you have many overlooked but solidly profitable companies who have little or no top-line growth, such as General Motors, automotive suppliers, airlines and retailers.We would say the market is full of interesting opportunities, long and short. It is ok on balance as long as rates remain reasonable."




On one of his top holdings Commscope (COMM): "(COMM is) a $5 billion integrated manufacturer of end-to-end solutions connecting wired and wireless networks, including networking equipment like antennas as well as coaxial and fiber optic cables. Solid secular growth is rooted in increased use of streaming data, video and movies and increased use of smart phones and internet mobility in general. Foreign sales are 50% and increasing due to growth in less mature markets, both developed and emerging, which require improved bandwidth and connectivity. We see it as a solid business. Key customers include Comcast, Verizon, AT&T,Charter Communications, Anixter and Liberty Media.

We started scaling into CommScope last October around $30/share. From there, the shares rallied to $42, up by 40% within 6 months. We were trimming along the way to keep the position in check as a percentage of capital. Then, in early May, due to a reduced forecast for Q2-2017, for reasons we deem to be transitory, Commscope shares were knocked down to $35, where we added back the shares we had sold on strength previously.  We see the shares reaching $50 in the next 6 to 12 months on reasonable earnings and valuation assumptions. Given our analysis CommScope has solid downside support here,compelling upside on its own and also takeover potential."



On overlooked value play Diebold Nixdorf (DBD): "They are a leading maker of automated teller machines (ATM) as well as electronic point-of-sale (EPOS) solutions for the retail market. In ATM’s, NCR and Hyosung are key competitors and in the retail vertical it is IBM-Toshiba and NCR mostly.  There are some 3.3 million ATMs installed worldwide, one third of which are Diebold Nixdorf’s.

A key concern is that the proliferation of electronic payments will cause a reduced need for the use of ATM’s. We believe that this concern is overblown as cash transactions and notes in circulation continue to grow even in the United States and Europe.  ATMs remain a productivity tool for banks and an integral part of their customer interaction.While there has been a lot of consolidation of bank branches, the total ATM count in mature markets has actually been stable and now we see the overall banking sector is improving which bodes well for new and upgraded ATMs. The installed base is an important barrier to entry and key driver of business.  About 60% of Diebold Nixdorf’s sales come from maintenance services and software.

In the past two years, Diebold shares had fallen from $40 down to the low twenties. Besides a recent earnings warning in what is “year one” of a transformational merger, another key reason behind the share price weakness was a spell of declining capital spending by banks. The transformational deal was to buy a key competitor called Wincor Nixdorf out of Germany. Wincor, which was sold by Siemens to private equity in 1999, and subsequently listed in2004, generates $2.5 billion in sales, $1.5 billion from ATMs and $1 billion from retail point of sale systems (POS) used by retailers like Ikea, Zara and H&M. The cross-border deal took a year before it closed in August of last year, during which NCR and others took advantage of the uncertainty and inability by the two merger companies to react.  We see significant potential from combining the complementary footprints and capabilities ...  we see Diebold Nixdorf shares reaching over $40/share in 18-24 months, based on 11-12x our 2020 EPS target."


He also gives updates on Harman (HAR) and Owens-Illinois (OI) and chats about other topics.  You can read the rest of the interview here.

What We're Reading ~ 8/2/17

Profile of the founders of payments company Stripe [Bloomberg]

Staying competitive as the world changes [Collaborative Fund]

The unreformed stock picker: profile of Bill Miller [Forbes] 

Investment case for Gilead Sciences [WertArt Capital]

Netflix has $20 billion in debt - can it keep borrowing its way to success? [LA Times]

Palantir, the 'special ops' tech giant that wields as much power as Google [The Guardian]

Craft beer, brought to you by Big Beer [NPR]

On the threat of European grocery discounters [FBIC Group]

Priceline: the world's largest online travel company [Economist]

Electric vehicle outlook [Bloomberg]

Mental models: how to train your brain to think in new ways [James Clear]

The best path to long-term change is slow, simple and boring [NYTimes]

The 4 keys to learning anything [Zen Habits]
 

Lone Pine Capital Starts TransUnion Position

Steve Mandel's hedge fund firm Lone Pine Capital has filed a 13G with the SEC regarding shares of TransUnion (TRU).  Per the filing, Lone Pine now owns 5.1% of TRU with over 9.29 million shares.

This is a newly disclosed position for the hedge fund as they previously did not own it at the end of the first quarter.  The new filing was made due to activity on July 20th.

Per Google Finance, TransUnion is "a risk and information solutions provider to businesses and consumers. The Company provides consumer reports, risk scores, analytical services and decision capabilities to businesses. The Company operates through three segments: U.S. Information Services (USIS), International and Consumer Interactive. The USIS segment provides consumer reports, risk scores, analytical services and decisioning capabilities to businesses. The International segment provides services similar to its USIS segment to businesses in select regions outside the United States. The Consumer Interactive segment offers solutions that help consumers manage their personal finances and take precautions against identity theft. Businesses uses its solutions for their process workflows to assess consumer ability to pay for services, measure and manage debt portfolio risk, collect debt, verify consumer identities and investigate potential fraud."

Senator Investment Group Takes Hyatt Hotels Stake

Alex Klabin and Doug Silverman's hedge fund firm Senator Investment Group has filed a 13G with the SEC regarding shares of Hyatt Hotels (H).  Per the filing, Senator now owns 5.82% of Hyatt with over 2.28 million shares.

This is a newly disclosed equity stake for the firm as they previously did not own any shares as of the end of the first quarter.  The new filing was made due to activity on July 17th.

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

Per Google Finance, Hyatt Hotels is "a global hospitality company. The Company develops, owns, operates, manages, franchises, licenses or provides services to a portfolio of properties. The Company operates through four segments: owned and leased hotels; Americas management and franchising (Americas); ASPAC management and franchising (ASPAC), and EAME/SW Asia management and franchising (EAME/SW Asia). The owned and leased hotels segment consists of its owned and leased full service and select service hotels. The Americas segment consists of its management and franchising of properties located in the United States, Latin America, Canada and the Caribbean. The ASPAC segment consists of its management and franchising of properties located in Southeast Asia, as well as China, Australia, South Korea, Japan and Micronesia. The EAME/SW Asia segment consists of its management and franchising of properties located in Europe, Africa, the Middle East, India, Central Asia and Nepal."

Tiger Global Shows Redfin Stake, Ups Apollo Stake Again

Chase Coleman's hedge fund firm Tiger Global has submitted a couple filings to the SEC.  Here are the details:

Tiger Global Shows Extent of Redfin Stake

Redfin just completed its initial public offering (IPO) under the ticker symbol RDFN.  Per a Form 3 filed with the SEC, Tiger Global already had a stake in the company from when it was private. 

They owned 1,852,943 Series B convertible preferred stock, 3,705,838 Series F convertible preferred stock, as well as 617,826 Series G convertible preferred stock.

Upon completion of the IPO, the convertible preferred stock will "automatically convert into common stock of the Issuer on a 1:1 basis" per the filing.

Per Google Finance, Redfin is "a United States-based real estate broker company. The Company provides real estate search and brokerage services. The customer can search for homes by neighborhood, city or MLS number, or can refine results using detailed parameters, such as price and number of beds or baths. The Company serves home buyers and sellers. Redfin Builder Services is its sales platform designed specifically for home builders and condominium developers. Redfin Builder Services support product analysis, digital marketing, media, listing management and sales, pricing, and reporting. The customer can search homes for sale in Austin, Atlanta, Baltimore, Boston, Charlotte, Chicago, Dallas, Denver, Fort Lauderdale, Houston, Lake Tahoe, Las Vegas, Los Angeles, Miami, New York, Philadelphia, Phoenix, Portland, OR, Raleigh, San Antonio, San Diego, San Francisco, Sacramento, San Jose, San Luis Obispo, Santa Barbara, Seattle, Washington, and West Palm Beach."


Tiger Global Ups Apollo Stake Again

As we've detailed in previous months, Tiger Global has been accumulating a position in private equity firm Apollo Global (APO).

Their latest just-filed Form 4 with the SEC indicates they purchased 3,200 more APO shares on July 25th at a weighted average price of $27.966 and also purchased 53,000 shares on July 26th at a weighted average price of $27.96.

After these latest purchases, Tiger Global's stake in APO is now over 33.45 million shares.

Per Google Finance, Apollo Global is "an alternative investment manager in private equity, credit and real estate. The Company raises, invests and manages funds on behalf of pension, endowment and sovereign wealth funds, as well as other institutional and individual investors. The Company's segments include private equity, credit and real estate. The private equity segment invests in control equity and related debt instruments, convertible securities and distressed debt investments. The credit segment invests in non-control corporate and structured debt instruments, including performing, stressed and distressed investments across the capital structure. The real estate segment invests in real estate equity for the acquisition and recapitalization of real estate assets, portfolios, platforms and operating companies, and real estate debt, including first mortgage and mezzanine loans, preferred equity and commercial mortgage backed securities."

JANA Partners Sends Letter to EQT's Board, Still Opposes Rice Transaction

Barry Rosenstein's activist hedge fund JANA Partners has filed an amended 13D with the SEC regarding its position in EQT (EQT).  Per the filing, JANA still owns 5.8% of the company with 10,017,129 shares (including options to purchase 1.86 million shares).


We highlighted previously that JANA opposed EQT's transaction with Rice Energy.  They continue to oppose it and JANA has sent a letter to EQT's board, which is embedded below:



You can also read it via the SEC's website here.

Capitalize For Kids Investors Conference 2017: Einhorn, Watsa, Chilton & More

The 2017 Capitalize For Kids Investors Conference is only a few months away in Toronto, Ontario.  It features top investment managers sharing their investment ideas while all proceeds are allocated to solving the toughest challenges in children's brain and mental health.

You can learn more about the conference and register at their website: https://www.capitalizeforkids.org/conference


Capitalize For Kids Conference Details

When: October 18th and 19th, 2017

Where:  Arcadian Court, Toronto, Ontario


2017 Speakers List

David Einhorn, Greenlight Capital

Richard Chilton, Chilton Investment Company

Prem Watsa, Fairfax Financial 

Aaron Cowen, Suvretta Capital

Jeffrey Smith, Starboard Value

Brad Dunkley and Blair Levinsky, Waratah Capital

Dan Dreyfus, 3G Capital

Samantha Greenberg, Margate Capital

Paul Hilal, Mantle Ridge

Ted Goldthorpe, BC Partners

James Keenan, BlackRock

Jeffrey Olin, Vision Capital

Brandon Osten, Venator Capital

David Blitzer, Blackstone

John Wilson, Sprott

Richard Pilosof and Mike Quinn, RP Investment Advisors

Youlia Rowland, Proxima Capital

Ajay Royan, Mithril Capital

Christian Lassonde, Impression Ventures


This is a high quality event and basically has become Canada's pre-eminent investment conference.  And as you can see above, it features some quality speakers.  Hear their latest investment ideas and benefit charity at the same time.

The conference is already 60% sold out, so hurry before it's too late.  More than 400 pension plans, family offices, and buy-side investors will be in attendance.

You can register for the conference by clicking here.

Embedded below is the flyer for the event:

Hedge Fund Links ~ 7/28/17

Baupost's Jim Mooney warns of potential trigger for next crisis [Business Insider]

Paulson winds down long/short fund amid strategy refocus [Bloomberg]

Would you invest with Steven Cohen? [Institutional Investor]

Activist hedge funds pull hard on the M&A lever [Reuters]

Wealthy investors are leaving hedge funds for real estate [Bloomberg]

Loophole closed: hedge fund managers prepare huge tax checks [WSJ]

Eminence Capital Boosts CyberArk Software Stake

Ricky Sandler's hedge fund firm Eminence Capital has filed a 13G with the SEC regarding shares of CyberArk Software (CYBR). Per the filing, Eminence now owns 5.4% of the company with over 1.88 million shares.

This is an increase of 1.47 million shares since the end of the first quarter when they previously owned 415,460 shares. The latest filing was due to activity on July 14th.

You can view other recent portfolio activity from Eminence Capital here.

Per Google Finance, CyberArk Software is "an Israel-based provider of information technology (IT) security solutions that protects organizations from cyber-attacks. The Company's software solutions are focused on protecting privileged accounts, which have become a critical target in the lifecycle of cyber-attacks. The Company's Privileged Account Security Solution consists of various products, such as Shares Technology Platform, Enterprise Password Vault, SSH Key Manager, Privileged Session Manager, Privileged Threat Analytics, Application Identity Manager, CyberArk-Conjur, Endpoint Privilege Manager and On-Demand Privileges Manager. The Company's products provide protection against external and internal cyber threats and enables detection and neutralization of attacks. The Company's Enterprise Password Vault provides customers with a tool to manage and protect all privileged accounts across an entire organization, including physical, virtual or cloud-based assets."

Third Point Q2 Letter: Re-enters Alibaba, Adds BlackRock Stake

Dan Loeb's hedge fund firm Third Point was up 4.6% for the second quarter and is up 10.7% for the year.  Third Point's second quarter letter reveals they've re-entered Alibaba (BABA).  They feel now is the time to re-enter due to the company's launch of personalized advertising, new ad tech for brand advertisers, as well as revenue potential from higher ad loads, among other reasons.

Backing out net cash and some other stakes, Loeb's firm feels Alibaba's core business alone is worth $121 per share (around 15x their 2019 EPS estimate of $8.20) with earnings growing 30% year-on-year.  They feel BABA can close the valuation gap with competitors like Tencent, which trades at 32x consensus 2018 EPS.

Third Point also reveals a stake in BlackRock (BLK) in the letter.  Rather than simply being an asset manager. they feel it's "becoming a network or index-like business, with earnings power driven by ETFs (via iShares) and data & analytic services (via Aladdin).  They point out they're basically oligopoly businesses.

Also, a few months ago we highlighted how this hedge fund has gone activist on Nestle and we posted Third Point's letter on Nestle here.

Embedded below is Third Point's Q2 2017 letter:



You can download a .pdf copy here.

For other recent hedge fund letters, you can also read Greenlight Capital's Q2 letter here.

Howard Marks' Cautionary New Memo on Cycles: "There They Go Again... Again"

Oaktree Capital Chairman Howard Marks is out with a new memo.  It's entitled "There They Go Again... Again."  He notes that, "Some of the memos I'm happiest about having written came at times when bullish trends went too far, risk aversion disappeared and bubbles inflated."  He feels that it's time again for a cautionary memo.

His latest writings delve into the topics of cycles and what seeds are needed for the foundation of a bull market, boom or bubble.  He outlines how investors gradually shift from a benign environment, to one with more money than ideas, to suspension of disbelief, to rejection of valuation norms, to eventually the almighty "fear of missing out."

While Marks says many of the ingredients are in play today, a few usual ingredients are notably missing.  He also writes that, "Most people can't think of what might cause trouble anytime soon.  But it's precisely when people can't see what it is that could make things turn down that risk is highest, since they tend not to price in risks they can't see."

This is an excellent memo and worth reading in its entirety.

Embedded below is Oaktree Capital and Howard Marks' new memo: There They Go Again... Again:



You can download a .pdf copy here.

For more letters from prominent investors, we've recently posted Third Point's Q2 letter and Greenlight Capital's Q2 letter.

What We're Reading ~ 7/26/17

The most important moat [Base Hit Investing]

Technical Analysis of Financial Markets [John Murphy]

Ferrari (RACE) sells veblen goods, not cars [Intrinsic Investing]

Buy time, they're not making any more of it [Abnormal Returns]

On reinvestment moats and Zooplus [Connor Leonard]

On perceived versus real risk tolerance [Aleph Blog]

On why it's so hard to be a contrarian investor [Medium]

A Hermes Birkin bag generates higher return than stocks? [BagHunter]

Snapchat (SNAP) isn't a social network, it's a toy [Vanity Fair]

Can anyone bury Bloomberg? [Institutional Investor]

Tiger Global Adds To Apollo Stake

Chase Coleman's hedge fund firm Tiger Global has filed a Form 4 with the SEC regarding its stake in Apollo Global Management (APO).  Per the filing, Tiger Global acquired 100,916 shares of APO on July 19th at a weighted average price of $27.357.

They also bought 149,052 shares on July 20th at a weighted average price of $27.897.  After these buys, Tiger Global now owns over 33.13 million shares.  As we've detailed previously, Tiger Global has been accumulating Apollo Global shares throughout the past few months.

Per Google Finance, Apollo Global Management is "an alternative investment manager in private equity, credit and real estate. The Company raises, invests and manages funds on behalf of pension, endowment and sovereign wealth funds, as well as other institutional and individual investors. The Company's segments include private equity, credit and real estate. The private equity segment invests in control equity and related debt instruments, convertible securities and distressed debt investments. The credit segment invests in non-control corporate and structured debt instruments, including performing, stressed and distressed investments across the capital structure. The real estate segment invests in real estate equity for the acquisition and recapitalization of real estate assets, portfolios, platforms and operating companies, and real estate debt, including first mortgage and mezzanine loans, preferred equity and commercial mortgage backed securities."

For more on this hedge fund, you can view additional recent portfolio activity from Tiger Global here.

Fairholme Capital Increases St. Joe Position

Bruce Berkowitz's investment firm Fairholme Capital has filed an amended 13D with the SEC regarding its position in St. Joe (JOE).  Per the filing, Fairholme now owns 36.1% of the company with over 25.47 million shares.

This is an increase from the 25.1 million shares they owned at the end of May per a previously filed form 13D.

The filing notes that Berkowitz was buying JOE shares in late May, and early-to-mid June at prices ranging from $17.2483 to $17.8468.

You can view previous portfolio activity from Fairholme here.

Per Google Finance, St. Joe is "a real estate development, asset management and operating company. The Company operates through five segments: residential real estate; commercial real estate; resorts and leisure; leasing operations, and forestry. Its residential real estate segment plans and develops primary residential and resort residential communities of various sizes on its existing land. Its commercial real estate segment plans, develops, manages and sells real estate. Resorts and leisure segment features a portfolio of vacation rentals and hotel operations, as well as golf courses, a beach club, marinas and other related resort amenities. Its leasing operations business includes its retail and commercial leasing. Its forestry segment focuses on the management of its timber holdings in Northwest Florida."

Paulson & Co Trims Trilogy Metals Stake

John Paulson's hedge fund firm Paulson & Co has filed a Form 4 with the SEC regarding its stake in Trilogy Metals (TMQ).  Per the filing, Paulson sold 18,247 shares on June 8th at a price of $0.5985.  After this sale, they still own over 11.56 million shares of TMQ.

For more from this fund, head to other recent portfolio activity from Paulson & Co.

Per Google Finance, Trilogy Metals is "formerly NovaCopper Inc., is a Canada-based base metals exploration company. The Company focuses on exploring and developing its mineral holdings in the Ambler mining district located in Alaska, the United States. The Company's principal assets, the Upper Kobuk Mineral Projects (UKMP or UKMP Projects), are located in the Ambler mining district in Northwest Alaska. The Company's UKMP Projects include approximately 352,943 acres consisting of the Ambler and Bornite lands. The Ambler lands hosts the Arctic copper-zinc-lead-gold-silver Project and other mineralized targets within a 100-kilometer long volcanogenic massive sulfide belt. The Amber lands are located in Northwestern Alaska and consist of over 112,050 acres of Federal patented mining claims and State of Alaska mining claims. The Bornite deposit is located approximately 25 kilometers southwest of its Arctic deposit. The Bornite lands hosts the Bornite carbonate-hosted copper Project."

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JANA Partners Exits Whole Foods Market Stake

Barry Rosenstein's hedge fund firm JANA Partners has filed an amended 13D with the SEC regarding shares of Whole Foods Market (WFM).  Per the filing, JANA Partners has sold its entire position as of July 17th. 

As an activist investor, JANA Pushed Whole Foods to sell itself and the company recently agreed to a deal with Amazon (AMZN).  Instead of sitting around in a merger arbitrage trade, it looks like JANA has decided to move on to its next opportunity.

For more on this firm, we've highlighted a stock JANA Partners recently bought here.

Per Google Finance, Whole Foods is "is engaged in the business of natural and organic foods supermarket. The Company operates approximately 456 stores in the United States, Canada and the United Kingdom. Its stores have an average size of approximately 39,000 square feet, and are supported by its distribution centers, bake house facilities, commissary kitchens, seafood-processing facilities, a produce procurement center, and a specialty coffee and tea procurement and roasting operation, among others. It offers over 30,000 organic stock keeping units (SKUs), covering various areas of its store, including produce, packaged goods, bulk, frozen, dairy, meat, bakery, prepared foods, coffee, tea, beer, wine, cheese, nutritional supplements, vitamins, body care, pet foods and household goods. The Company's brands include 365 Everyday Value, Allegro Coffee, Whole Foods Market, Whole Paws, and Engine 2 Plant-Strong. It also offers approximately 400 temporary exclusives."

Corvex Management Adds To Energen Position

Keith Meister's activist firm Corvex Management has filed an amended 13D regarding shares of Energen (EGN). Per the filing, Corvex now owns 8.8% of the company with over 8.51 million shares.

This is an increase of over 1.1 million shares since late June when Corvex was previously buying EGN.  The filing notes they were buying in early July and as recent as July 19th. They bought between $47.11 and $50.57.

Corvex's stake is actually comprised of 8.1 million shares of common stock and various stock options. They have 415,200 shares underlying call options that have an exercise price of $50 and expiration of October 20, 2017. They've also sold the same amount of call options with an exercise price of $60 and the same expiration in October. Also, they've sold the same amount of put options with an exercise price of $40 and expiration of January 19, 2018.

For more on this fund, we've highlighted how Corvex has bought another stock recently.

Per Google Finance, Energen is "an oil and natural gas exploration and production company. The Company is engaged in the exploration, development and production of oil and natural gas properties and natural gas. Its operations are conducted through subsidiary, Energen Resources Corporation and occur within the Midland Basin, the Delaware Basin and the Central Basin Platform areas of the Permian Basin in west Texas and New Mexico. The Company is focused on increasing its oil, natural gas liquids and natural gas production and proved reserves through active development and/or exploratory programs in the Permian Basin. As of December 31, 2016, oil, natural gas liquids and natural gas represented approximately 60%, 20% and 20% of its reserves. As of December 31, 2016, its development activities added approximately 327 million barrels of oil equivalent (MMBOE) of reserves from the drilling of 623 gross development, exploratory and service wells and 73 well recompletions and pay-adds."