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Esterline Technologies Corporation (ESL) Buys Back Shares From Relational Investors

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In a new filing with the U.S. Securities and Exchange Commission, Relational Investors, led by Ralph V. Whitworth, disclosed reducing its stake in Esterline Technologies Corporation (NYSE:ESL). According to the filing, Esterline Technologies Corporation (NYSE:ESL) acquired more than 688,885 shares from Relational under a stock repurchase agreement. Following the sale, which was completed yesterday, Relational Investors now holds 1.46 million Esterline shares, representing 4.75% of the company’s common stock. At the end of March, Relational Investors held 2.48 million shares of Esterline Technologies Corporation (NYSE:ESL), indicating the fund also sold about 332,000 shares of the company separately since March 31. Esterline Technologies Corporation (NYSE:ESL) is a specialty manufacturer serving global aerospace and defense markets.

Ralph V. Whitworth

We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 135%, nearly 2.5 times greater returns than the S&P 500 during the same period (see more details).

Founded in 1996, Relational Investors uses rigorous research to identify undervalued companies. It strives to engage the management and board of the target companies in a constructive dialogue to increase shareholder value. Relational Investors has about $2.87 billion in assets under management (AUM), while the market value of its public equity portfolio stood at $2.38 billion at the end of the first quarter of 2015. The fund’s top holdings consisted of Mondelez International Inc (NASDAQ:MDLZ), Hologic Inc. (NASDAQ:HOLX), and Bunge Ltd (NYSE:BG).

Ralph V. Whitworth
Ralph V. Whitworth
Relational Investors

Esterline Technologies Corporation (NYSE:ESL) is a maker of engineered products and systems for aerospace and defense customers. It has a market cap of $2.89 billion. On July 6, Esterline Technologies Corporation (NYSE:ESL) entered into a stock repurchase agreement with Relational Investors and certain of its affiliates. Under the agreement, Esterline Technologies Corporation (NYSE:ESL) acquired 688,885 common shares from Relational at $92.65 per share, for a total purchase price of about $64 million. The purchase price represents a 2.5% discount from the volume weighted average of the closing price of Esterline’s common shares on the New York Stock Exchange on the five consecutive trading days ending on and including July 6, 2015, Esterline said in a statement. The shares were purchased by Esterline Technologies Corporation (NYSE:ESL) as part of its current share repurchase program. The purchase was funded by the company using a combination of cash on hand and short-term borrowing under its existing credit facility.

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