Nike, Inc. (NKE), VMware, Inc. (VMW) Among This Billionaire’s Big Sells

Page 1 of 2

ELLIOTT MANAGEMENTPaul Singer founded Elliott Associates in 1977, and since then has taken an activist approach to investing. Singer takes meaningful positions in companies that are distressed and underperforming in an effort to encourage management to unlock shareholder value, either by a spinoff or a reorganization. Singer holds a BS in psychology from the University of Rochester and a JD from Harvard. Before founding Elliott, Singer spent time at various law firms and DLJ. In reviewing Singer’s most recent 13F filing, we found five stocks that he was selling during the third quarter (check out Singer’s newest picks).

VMware, Inc. (NYSE:VMW) is expected to see total revenues up 17% in 2013 on the back of server virtualization trends. These trends should eat up a good portion of company IT budgets going forward, so why is Singer selling out of this virtualization leader? At first glance, VMware trades well above its peers at 55x earnings, but its forward P/E of 30x suggests investors may still be under-appreciating the stock.

Despite an uncertain economic outlook, the expected spending on cloud computing remains strong. The strength in VMware’s virtualization software continued last quarter, with enterprise license agreements up 24% year over year. One negative for VMware is that earnings growth is slowing. The sell-side expects it to grow EPS by 22-23% a year over the next half-decade; this is far below the 45% growth rate VMware has averaged since 2007. Billionaire Jim Simons is still VMware’s top fund owner, but also reduced his stake by 40% last quarter (see Jim Simons’ top picks).

Nike, Inc. (NYSE:NKE) recently divested its Cole Haan and Umbro brands in an effort to better focus its operations. Nike has a global presence, but weakness in China brings to light growth concerns. The shoe company’s initiatives to align products with the Chinese economy will also lead to elevated marketing expenses, which will pressure margins over the interim. A build-up of inventories in this region is also a cause for concern.

This leads us to question the shoe company’s valuation. Sales from China saw 20% growth two quarters ago, but then a 6% growth decline last quarter. Nike’s current P/E of 20x is above its major peers Steven Madden (16.6x) and Adidas (17x). Interestingly, billionaire Ken Griffin – founder of Citadel Investment Group – is still one of Nike’s top owners after a 600% stake increase last quarter (see Ken Griffin’s latest picks).

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!