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Icahn Cuts Stake In Gannett Co Inc. (GCI), Sandell Gives Up On Ethan Allen Interiors Inc. (ETH), Plus Two Other Moves

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Shareholder activism has been surging over the past several years, with the shareholder activism arena managing approximately $120 billion in assets under management. Activist hedge funds are currently able to shake up even the largest companies in the equity market, as investors have been consistently channeling more capital into these investment vehicles. Nonetheless, activists’ returns have not always impressed their investors and other market participants. For instance, the 13D Activist Fund, a mutual fund that provides exposure to shareholder activism, was down by roughly 11% last year, partially owing to its exposure to Bill Ackman’s targets. Even so, the mutual fund has generated an annualized average returns of nearly 14% since the end of 2011, despite suffering a significant loss in 2015. Therefore, activist targets tend to beat the market on average, so individual investors should pay close attention to these investments. With that in mind, the following article discusses three 13D (activist) filings and one 13G (non-activist) filing submitted by widely-known activists and other hedge funds managers.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see more details here).

According to a newly-amended 13D filing, Jeffrey Smith’s Starboard Value LP currently owns 2.57 million shares of Four Corners Property Trust Inc. (NYSE:FCPT), which account for 6.0% of the company’s outstanding common stock. The reputable activist fund received 3.88 million shares of the real estate investment trust (REIT) in connection with its spinoff from Darden Restaurants Inc. (NYSE:DRI) on November 9, which Jeffrey Smith is the Chairman of. Four Corners Property Trust Inc. (NYSE:FCPT) currently owns 424 restaurants and the majority of them are leased back to Darden Restaurants through triple-net leases with an average initial term of roughly 15 years with stated annual rental payments and options to extend the leases for an additional 15 years. Earlier this month, the company declared two dividends totaling $8.32 per share, which include an $8.12 per share pre-spinoff dividend that represents the company’s estimated share of earnings that had to be distributed for the operating period prior to the spinoff.

Jeffrey Smith
Jeffrey Smith
Starboard Value LP
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