FrontFour Capital Says Changes Needed at OM Group; See Fund’s Two Other Top Picks

As it has been mentioned above, OM Group, Inc. (NYSE:OMG) represented the largest long position in terms of value in FrontFour’s equity portfolio at the end of 2014. Additionally, the fund also held 1.43 million shares of Diamond Resorts International Inc (NYSE:DRII), the $39.84 million stake being the second-largest in the fund’s equity portfolio. The stock of the resorts operator gained 80% in the last 52 weeks as the company’s revenue surged to $845 million in 2014 from $730 million a year earlier and it turned to a profit of $0.77 per diluted share from a loss of $0.04. Diamond Resorts International Inc (NYSE:DRII), which has a market cap of $2.6 billion, also has billionaires Ken Griffin and Israel Englander among its shareholders. At the end of 2014, Griffin’s Citadel Investment Group held 704,300 shares and Englander’s Millennium Management owned 577,500 shares of Diamond Resorts International Inc (NYSE:DRII), both positions being slightly increased during the last three months of 2014.

In addition, FrontFour disclosed a $36.06 million stake in Innophos Holdings, Inc. (NASDAQ:IPHS), which represented the third-largest holding in the fund’s equity portfolio. The investor trimmed its stake by 3% on the quarter to just under 617,000 shares. FrontFour first disclosed holding 98,100 shares of the specialty grade phosphate products company at the end of March, 2014. Since then, the stock has remained almost flat, but FrontFour has been bullish throughout 2014 as it significantly increased its exposure to the company.  Innophos Holdings, Inc. (NASDAQ:IPHS) posted a 1% annual decrease in revenues for 2014 to $839 million, though EPS grew to $2.91 from $2.21, which however, wasn’t very appreciated by analysts as in the following days after the financial report, Monness Crespi & Hardt and Zacks downgraded the stock to ‘Neutral’ from ‘Buy’ and ‘Outperform’ respectively. Moreover, among other funds that we track, Jim Simons‘ Renaissance Technologies surged its stake in Innophos Holdings, Inc. (NASDAQ:IPHS) by 450% to 200,600 shares and Millennium Management raised its holding by 200% to 183,300 shares, although both positions represent around 0.02% of the equity portfolios of each fund.

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