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Latest Hedgies’ Moves in Lions Gate Entertainment Corp. (USA) (LGF), Qunar Cayman Islands Ltd (QUNR) and iRobot Corporation (IRBT)

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Mark Rachesky‘s MHR Fund Management cut its activist stake in Lions Gate Entertainment Corp. (USA) (NYSE:LGF) by nearly 19.5%, as it sold about 10 million shares through its affiliated funds, according to a 13D filing with the SEC. In another similar filing, Hillhouse Capital Management, which is run by Lei Zhang sold a total of 789,600 Class B shares of Qunar Cayman Islands Ltd (NASDAQ:QUNR) through its affiliates, Gaoling Fund, L.P. and YHG Investment, L.P. at an average price of $38.59. Another move was disclosed by Willem Mesdag‘s Red Mountain Capital as it initiated a stake in iRobot Corporation (NASDAQ:IRBT) by acquiring some 1.5 million shares representing 5.1% of the company’s outstanding common stock.

Mark Rachesky MHR

Insider Monkey tracks hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of 6 basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of 7 basis points per month between 1999 and 2012. These stocks were able to generate alpha because of their lower risk profile. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month. These stocks were slightly riskier, so their monthly alpha was 80 basis points (read the details here). We believe investors will be better off by focusing on small-cap stocks rather than large-cap stocks. However, risk-averse investors may also have a slight edge by focusing on hedge funds’ large-cap picks rather than investing in index funds.

MHR entered into an underwriting agreement with J.P. Morgan Securities LLC, whereby through its affiliated funds it agreed to sell to the underwriter 10 million shares of  Lions Gate Entertainment Corp. (USA) (NYSE:LGF) at $31.6 per unit. Under the agreement J.P Morgan Securities can purchase up to 1.5 million additional  shares from MHR in the next 30 days. MHR’s current stake in Lions Gate Entertainment Corp. (USA) (NYSE:LGF) contains  41.26 million shares and represents 28.3% of the company’s common stock.

The stock of the $4.4 billion global entertainment company, Lions Gate Entertainment Corp. (USA) (NYSE:LGF), has appreciated by 16.5% over the last year. During the third fiscal quarter, the company’s revenues from the television division nearly doubled on a yearly basis, but the Motion Picture failed to deliver on expectations as its revenues fell by about 22%. The company also recently entered into a stock exchange agreement with affiliates of media leader Dr. John Malone, under the terms of which Lionsgate will exchange 3.43% of its common stock for 4.51% of Starz (NASDAQ:STRZA)’s outstanding shares. Malone will also join Lionsgate’s Board of Directors. Another Lions Gate Entertainment Corp. (USA) (NYSE:LGF) shareholder is David Goel and Paul Ferri’s Matrix Capital Management, which increased its stake in the company by 7.76% in the fourth quarter to 4.59 million shares valued at $146.86 million.

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