Hedge Fund Links ~ 8/7/15

Soros' CIO Scott Bessent to start own hedge fund with $2 billion [Reuters]

ValueAct said to take stake in American Express and also in Smiths Group [Bloomberg & FT]

Citadel's Ken Griffin leaves 2008 tumble far behind [WSJ]

China freezes Citadel's account [Reuters]

JANA Partners slips as event-driven funds lag [ii alpha]

Paulson: gold is now 'fairly valued' [Reuters] 

What we can learn from women-led funds that outperform [InvestmentNews]

What causes performance persistence in hedge fund activism? [SSRN]

Carl Icahn Starts Cheniere Energy Stake; Trims Hologic Position

Carl Icahn has recently filed two 13D's with the SEC regarding recent portfolio activity.


Icahn Starts Cheniere Energy (LNG) Stake

First, Icahn has disclosed a new position in Cheniere Energy (LNG).  Per his 13D filing, Icahn now owns 8.18% of the company with over 19.35 million shares (including shares underlying forward contracts and call options).

The filing was made due to activity on July 27th and contains the standard activist boilerplate that he intends to speak with management and might seek board representation "if appropriate."

Icahn's not alone in his new bet.  Seth Klarman's Baupost Group has been an equity holder for a few quarters now.  Viking Global, Lone Pine Capital, Steadfast Capital, and others are also top holders (this is actually a bit of a hedge fund hotel).

We've also recently highlighted some of Icahn's other portfolio activity here.

Per Google Finance, Hologic is "an energy company engaged in Liquefied natural gas (LNG) businesses. The Company operates through two segments: LNG terminal business, and LNG and natural gas marketing business The Company owns and operates the Sabine Pass LNG terminal in Louisiana through its ownership interest in and management agreements with Cheniere Energy Partners, L.P. (Cheniere Partners), which is a publicly traded limited partnership. The Company owns 100% of the general partner interest in Cheniere Partners and 80.1% of Cheniere Energy Partners LP Holdings, LLC (Cheniere Holdings), which is a publicly traded limited liability company that owns a 55.9% limited partner interest in Cheniere Partners. The Company is engaged in the development of two LNG terminal projects: the Sabine Pass LNG terminal in western Cameron Parish, Louisiana, and the Corpus Christi LNG terminal near Corpus Christi, Texas.."


Also Trims Hologic (HOLX) Position

Second, Icahn filed a second 13D recently regarding his existing position in Hologic (HOLX).   He now owns 9.99% of the company with over 28.15 million shares.

The filing indicates he sold shares on August 4th at $40.47.  His stake now is slightly lower compared to the 34.15 million shares he owned back at the end of the first quarter.

After the sale, he tweeted, "Trimmed our position but remain a huge supporter of Steve MacMillan and the @Hologic ($HOLX) team."

Per Google Finance, Hologic is "a developer, manufacturer and supplier of diagnostics products, medical imaging systems and surgical products. The Company’s business units are focused on diagnostics, breast health, GYN surgical and skeletal health. The Company’s diagnostics products include Aptima family of assays, its ThinPrep system, the Rapid Fetal Fibronectin Test and its Procleix blood screening assays. The Aptima family of assays is used to detect the infectious microorganisms that cause the common sexually transmitted diseases, chlamydia and gonorrhea, certain high-risk strains of human papillomavirus (HPV), and Trichomonas vaginalis, the parasite that causes trichomoniasis. The Company’s GYN surgical products include its NovaSure Endometrial Ablation System and its MyoSure Hysteroscopic Tissue Removal System. The skeletal health products include dual-energy X-ray bone densitometry systems, an ultrasound-based osteoporosis assessment product, and its Fluoroscan mini C-arm imaging products."

You can also view Icahn's latest thoughts on the markets here.

Third Point Increases Baxter Holdings

Earlier this week, we highlighted how Dan Loeb's hedge fund Third Point disclosed a new activist stake in Baxter (BAX).  Third Point just filed an amended 13D and indicates their position size is now even larger.

They now own 9.6% of the company with over 52.5 million shares.  This is up from the 37.92 million shares they disclosed just a few days ago.

Third Point is seeking two board seats in order to help select a new CEO.

For more on this hedge fund, be sure to check out Third Point's Q2 letter.

Kingstown Capital Boosts Ocwen Financial Stake

Michael Blitzer's hedge fund firm Kingstown Capital has filed an amended 13D with the SEC regarding its position in Ocwen Financial (OCN).  Per the filing, Kingstown now owns 9.97% of Ocwen with over 12.5 million shares (though they have an aggregate economic exposure to 14 million shares due to cash-settled total return swaps).

This is up from the 12 million shares they owned at the end of the first quarter. The filing was made due to activity on August 4th.  The return swaps were purchased on August 4th and 5th at prices of $8.0053, $7.6299, and $7.7450.

The 13D contains the standard activist boilerplate that they may meet with management etc.  Kingstown was the largest reported institutional shareholder of OCN shares as of the end of Q1.

Shares of OCN were hit pretty much all throughout 2014 as regulator Benjamin Lawsky came down hard on the company, forcing its Chairman Bill Erbey to resign, among other changes.  OCN fell from $55 to $15 in 2014 and has continued to fall in 2015 down to current levels of $8.11.  Kingstown initiated their position in the first quarter of this year and has just recently bought more.

As we've highlighted earlier this year, Kingstown was also involved in shares of Home Loan Servicing Solutions (HLSS), another one of the companies that was in Bill Erbey's previous empire.

Per Google Finance, Ocwen Financial is "a financial services holding company. The Company through its subsidiaries is engaged in the servicing and origination of mortgage loans. The Company operates in three segments such as, servicing, lending, and corporate items and other. The Company develops programs, such as Shared Appreciation Modification (SAM) which incorporates principal reductions and lower payments for borrowers while providing a net present value positive loss mitigation outcome for investors, including the ability to recoup losses if property values increase over time."

Bill Ackman's Pershing Square Takes Mondelez Stake

Bill Ackman's activist hedge fund Pershing Square Capital has filed a 13D with the SEC regarding shares of Mondelez (MDLZ).  Per the filing, Pershing Square owns 7.5% of Mondelez with over 120.26 million shares.  This is a newly disclosed position.

The filing indicates they sold puts and bought call options in late June and early July and they also bought common stock.

It also says that as of August 6th, Pershing own over 64.8 million over the counter forward purchase contracts with a net purchase price of over $2.5 billion with Nomura as a counterparty. There's quite a few transactions and you can view them here.

The 13D also contains the normal activist boilerplate that they intend to engage with management.

Mondelez was spun-off from the original Kraft entity and represents more of the 'snacks and sweets' business.

The standalone Kraft Foods, on the other hand, is mainly their branded foods consumer staples company.  KRFT merged with Heinz recently under the guidance of 3G Capital and Berkshire Hathaway.  So now you have activists at both of the entities.

For more on Pershing Square, head to Bill Ackman's comments at the recent Delivering Alpha conference.

Third Point Goes Activist on Baxter

Dan Loeb's hedge fund firm Third Point has filed a 13D with the SEC regarding Baxter (BAX).  Per the filing, Third Point now owns 7% of the company with over 37.9 million shares.

This is a new position for the hedge fund and the filing was made due to activity on August 4th.  The filing also details their trading activity and Loeb's firm was out buying BAX in mid-to-late June and throughout July.  They really ramped up buying in the first few days of August around $40.49.

Third Point is seeking to gain two board seats in order to help in selecting a new CEO and sent a letter to Baxter. You can view the letter here

For more from Loeb's firm, head to Third Point's Q2 letter.

Glenview Capital Cuts VCA Position Size

Larry Robbins' hedge fund firm Glenview Capital has filed an amended 13G with the SEC regarding its position in VCA (WOOF).  Per the filing, Glenview now owns 9.83% of the company with a little over 8 million shares.

An additional Form 4 filed with the SEC indicates Glenview sold 4,720,800 shares on August 3rd, with the bulk of the trade being made at $56.33.

Earlier this week, we also highlighted some other Glenview portfolio activity.

Per Google Finance, VCA is "a national animal healthcare company operating in the United States and Canada. The Company operates in two segments: animal hospital and laboratory. The Company provides veterinary services and diagnostic testing to support veterinary care and also sells diagnostic imaging equipment and other medical technology products and related services to the veterinary market. The Company provides communication marketing solutions and other services to the veterinary community. The Company's animal hospital offer general medical and surgical services pharmaceutical products and performs pet wellness programs. The Company's communication and marketing solutions business provides services to veterinary practices pharmaceutical manufacturers and the pet owning community. The Company's network of veterinary diagnostic laboratories provides sophisticated testing and consulting services."

Marc Lasry on Wall Street Week: "Huge Opportunities" in Energy Debt & Europe

Anthony Scaramucci and Gary Kaminsky this week on Wall Street Week interviewed Marc Lasry of Avenue Capital, which now has $14 billion in assets under management after initially starting with around $7 million.  Lasry likes to take fixed income risk but generate equity-like returns.


Lasry noted that he's been seeing "huge opportunities" in the energy sector, mainly due to the fact that oil's gone down.  He says you don't want to be an equity holder, but you want to be a senior debt holder.

He's also finding some investments in Europe as the banks over there are deleveraging.  Avenue is buying assets at 60-70 cents on the dollar from people who are required to sell due to regulatory pressure.

On what he looks for in an investment:  "We're trying to buy something we think is worth 100 cents for 60 cents on the dollar.  So you're always trying to buy something at a discount to what you think the asset value is.  And you can only do that when you're buying from non-economic sellers... someone who's nervous or somebody who has to sell.  So you need to have a lot of drama or issues around the world."

Embedded below is the video of Marc Lasry's appearance on Wall Street Week:



Be sure to check out previous Wall Street Week episodes like their interview with David Rubenstein as well as Steve Einhorn here.

Pennant Capital Trims Universal Stainless & Alloy Products Position

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

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

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

12 West Capital Discloses Atlantic Power Stake

Joel Ramin's hedge fund firm 12 West Capital has filed a 13G with the SEC regarding shares of Atlantic Power (AT).  Per the filing, 12 West now owns 5.1% of the company with over 6.2 million shares.

This is a newly revealed position and the filing was made due to activity on July 24th.  The company recently sold its wind portfolio and redeemed senior unsecured notes.  Over the past month, AT common shares have fallen from around $3.25 to current levels of around $2.36.

Per Yahoo Finance, Atlantic Power Corporation "owns and operates a fleet of power generation assets in the United States and Canada."

You can view additional recent portfolio activity from 12 West Capital here.

Only 15 Seats Left For August 6th Family Office CIO Summit - NYC

With just a few days until the Family Office CIO Summit, we wanted to make sure you had a chance to sign up.  Our friends from the Family Office Club only have a few more seats left for next week's full-day, catered event with 25 investors speaking, 200+ attendees and plenty of networking opportunities.  Join family office CIOs and investment executives on August 6th by registering here:
http://www.WilsonConferences.com/CIO

If you have any questions, give Douglas from the Family Office Club a call at (212) 729-5067 or email him at Doug@WilsonConferences.com, or use their chat service on their website:
http://www.WilsonConferences.com/CIO

Third Point's Q2 Letter: Allergan, Suzuki Motor, Constellation Brands, Mohawk, Roper

Dan Loeb's hedge fund firm Third Point is out with its second quarter letter.  The hedge fund has generated annualized returns of 20.5% over the last two decades.

Third Point's Q2 letter outlines their thesis on 5 stocks.  Here's the brief summary with the full letter below.

Allergan (AGN):  Formerly Actavis, this company recently sold its generics business for ~17x EBITDA and Third Point thinks the company is poised to grow as a pure-play pharma company.  Branded assets + unlevered balance sheet + valuation below comparables = opportunity.

Suzuki Motor: This could be largely viewed as a play on India to capitalize on a growing middle class given the company's stake in Maruti as more people purchase cars. Overhang on shares due to litigation with Volkswagen.

Constellation Brands (STZ):  The next three stocks Third Point has labeled as 'compounders,' or companies that have good management and generate a lot of cash flow that's then allocated wisely to drive returns.  They see margin improvement and solid volume trends for this alcoholic beverage company and also think capital return to shareholders will ramp up further once capex comes down.

Mohawk (MHK):  This global flooring company is at the beginning of a cyclical recovery and seeing margin improvement.  They also see a lot of potential acquisition targets for the company.

Roper (ROP):  This company has generated 18% annualized shareholder returns over the last 10 years.  ROP runs a decentralized strategies and acquires a lot of companies.  They like the company's organic revenue growth and think it'll see a 15% CAGR going forward.


Embedded below is Third Point's Q2 letter:



You can view additional portfolio activity from Third Point here.

Glenview Capital Boosts HealthSouth Stake

Larry Robbins' hedge fund firm Glenview Capital has filed a 13G with the SEC regarding shares of HealthSouth (HLS).  Per the filing, Glenview has disclosed a 6.46% ownership stake in the company with over 5.9 million shares.

This is up from the 1.7 million HLS shares Glenview owned at the end of the first quarter.  The new filing was made due to activity on July 21st.

We also recently highlighted how Glenview added to its Tenet Healthcare (THC) stake.

Glenview has been extremely successful with their bets on the healthcare industry since the Affordable Care Act was initially introduced.  They've wagered on for-profit hospitals and insurers, among other things and have seen substantial returns from consolidation and increased profits at these companies.

Per Google Finance, HealthSouth is "an owner and operator of inpatient rehabilitation hospitals. The Company's inpatient rehabilitation hospitals offer rehabilitative care across an array of diagnoses, which include physical and cognitive disabilities or injuries due to medical conditions, such as strokes, hip fractures, head injuries, spinal cord injuries and a variety of debilitating neurological conditions. HealthSouth operates in around 33 states across the United States and in Puerto Rico and serves patients through its network of inpatient rehabilitation hospitals, home health agencies and hospice agencies. The Company's inpatient rehabilitation hospitals offer rehabilitative care across an array of diagnoses. As of December 31, 2014, the Company operated 107 inpatient rehabilitation hospitals. The Company's inpatient hospitals are concentrated in the eastern half of the United States and Texas."

You can view additional portfolio activity from Glenview here.