Download file (.pdf)

Subscribe to use our research platform, it only costs $80 for a year and you get full access to all tools on the site and data going back to 2007.

Activist Trends in 3rd Quarter 2014 Filings

An exploration and analysis of changes in the holdings of 25 activist managers

Notable Stocks

  • Golar LNG Limited Inc (GLNG)

  • Petsmart (PETM)

  • Vipshop Holdings (VIPS)

  • Dollar General (DG)

  • Family Dollar Stores (FDO)

  • SunEdison (SUNE)

  • Spectrum Brands Holdings (SPB)

  • Hologic (HOLX)

  • Micron Technology (MU)

Capitalization and Sector

Holdings by Capitalization

The number of Small cap stocks held by activist filers increased this quarter while the number of Nano cap stocks held decreased. Otherwise, there weren't any significant changes to the distribution of holdings by capitalization.

Holdings by Sector

Similar to holdings by capitalization, there wasn't a clear rotation into or out of any particular sectors. Nonetheless, the reduction in Technology holdings and the increase in Basic Materials positions is significant and even though the number of Industrial Goods positions held didn't change, the average position size dropped significantly. Two managers who previously owned D Owens Corning (OC) sold their entire position. This was balanced out by new positions in Danaher Corp (DHR) and Dresser Rand Group (DRC).

New Positions

Top New Positions by Number of Holders

Not surprisingly, Alibaba Group Holdings (BABA) was the most added position amongst activist filers. Also notable were the new holdings in Golar LNG Limited Inc (GLNG). Here's a chart showing the number of filers holding Golar LNG Limited Inc (GLNG) over time,

Golar LNG Limited Inc (GLNG) Owners

The recent uptick is from 163 holders last quarter to 212 holders this quarter and the stock has also had an impressive performance this year, up 36.92%. The stock peaked at nearly double it's opening price this year and has given back nearly half of those gains back over the last two months.

Here's a table of new holdings now sorted by average weight,

Top New Positions by Average Size

The Fidelity & Guaranty Life (FGL) position is no surprise given that Harbinger Holdings brought the company to market. Sandell Asset Management initiated the two new positions in Semgroup Corp (SEMG) and TW Telecom Inc (TWTC). Sandell Investment Services LLC, presumably related to Sandell Asset Management, also holds a position in Semgroup Corp (SEMG) amounting to 9.78% of their 13F holdings portfolio. The newPetsmart (PETM) position was placed by Jana Partners and even though it only amounts to 3.82% of their portfolio, the 9.7 million share holding is nearly 11% of the outstanding float. The other significant holder is Longview Asset Management (not in our activist list of managers) at around nearly 9 million shares. The company has had a flat year in terms of price performance but there was a noticeable uptick in owners this quarter,

Petsmart (PETM) Owners

Passport Capital joins a long, and not insignificant list of asset managers as owners of Vipshop Holdings (VIPS) shares. The stock is up a tremendous 183.15% this year and has an astronmical P/E. At the same time, an online discount shopping platform in China could have significant growth potential. Their margins seem to be at the lower end of their peer group but with the consistent growth in owners over the last two years it seems that many capable asset managers see some value in this company and it's certainly worth investigating further.

Vipshop Holdings (VIPS) Owners

Existing Positions

Top Positions by Number of Owners

Given the heated merger battle between Dollar General (DG) and Family Dollar Stores (FDO) it isn't surprising to see those two stocks held by many Activist investors. A total of six managers now hold Dollar General (DG):

Activist Owners of Dollar General (DG)

While 3G Capital Partners and Seneca Capital have large positions relative to their portfolios, Glenview Capital and Jana Partners hold a significant portion of the float (along with Lone Pine Capital incidentally). Interestingly, this was also a new position for Jana Partners (as well as Seneca Capital and Starboard Value).

The trend table above excludes positions which make up less than 0.10% of the filers holdings. In fact six activist managers hold a position in Family Dollar Stores(FDO) but as can be seen from the table below, Passport Capital only has a 0.07% position.

Activist Owners of Family Dollar Stores (FDO)

Glenview Capital and Starboard Value hold a position in both companies. Typical merger arbitrage of course would presume a long-short pair so the investment thesis behind these two long holdings isn't obvious. The only new holder in the list is P Schoenfeld Asset Management.

With Valeant (VRX) and Allergan(AGN) we have another merger story where managers fall on either side of the story. In this case though the average weights are large with Brave Warrior Advisors and Valueact Holdings owning 6.5 million and 19 million shares respectively (32% and 17% of their holdings). On the other side is Bill Ackman's Pershing Square Capital which holds around 29 million shares of Allergan (AGN), nearly 40% of their 13F holdings.

Perhaps a bit more under the radar but a great example of the kind of value investors can find in 13F filings is the SunEdison (SUNE) position held by five activist managers. On November 17th SunEdison (SUNE), along with TerraForm Power announced they would buy First Wind and the SUNE stock jumped 30%. Outside of only activist managers there has also been a steady increase in SUNE owners,

SunEdison (SUNE) Owners

While Greenlight Capital had the largest position in the stock, the list of managers holding SunEdison (SUNE) is similar to the list of Dollar General (DO) and Family Dollar (FDO) holders,

Activist Owners of SunEdison (SUNE)

Redeemed Positions

Top Redeemed Positions

The table above lists positions which were decreased between the two quarters (but not fully redeemed). The massive reduction in Spectrum Brands Holdings (SPB) by Harbinger Holdings is worth investigating a bit more. There aren't any press reports indicating why they reduced the position so significantly (from 30 million shares to only 3 million shares or equivalently from a $2.6 billion position to a $200 million position) so it's possible the shares were shuffled between Harbinger Holdings asset management vehicles but according to public filings with the SEC there aren't any other major holders of the stock. The stock has had a great run this year and Harbinger's reduction is probably a good signal that the stock may have run it's course for now (if indeed they sold out of their position).

Carl Icahn's holding in Hologic (HOLX) decreased 15% from the previous quarter and even though the company has performed quite well recently it may be worth re-evaluating exit price target for the stock. While insider sells in general aren't good indicators of stock price performance (actually insider buys are better signals since officers aren't going to buy unless they're bullish), the chart below shows a cluster of sells by the CFO and Chief Accounting Officer around when the price spiked to $25. The stock price didn't move strongly in either direcetion for a few months until recently pushing up past it's range to $27. TheStreet has also recently upgraded this company from a Hold to a Buy so there are definitely mixed signals.

Hologic (HOLX) Insider Trading Activity

The two holders of Micron Technology (MU) are Greenlight Capital and Seneca Capital. The 8% drop in average portfolio weight was because Greenlight Capital held an 18% position as of June 30th and Seneca Capital's new position of around 6% brought the average down. The stock is up 50% YTD and has also shown an increase in owners across all filers,

Micron Technology (MU) Owners

We'll conclude the report with a list of positions which were fully redeemed and held by more than one activist manager.

Fully Redeemed Positions

Fusion IO (FIO) and Questcor Pharmaceuticals (QCOR) were both acquired during the quarter.

Subscribe to use our research platform, it only costs $80 for a year and you get full access to all tools on the site and data going back to 2007.