Richard Barrera’s Roystone Capital Partners has made a big move into Orbital Sciences Corp (NYSE:ORB), adding around 2.55 million shares to their holding of the company’s stock, giving them a 6.2% passive stake with 3.75 million shares. The move was revealed in a filing with the SEC.
Roystone Capital is a New York-based hedge fund, founded in 2012 and with an equity portfolio valued at $2.45 billion as of September 30, 2014. The fast-growing fund added Orbital Sciences Corp (NYSE:ORB) to its portfolio in the third quarter of 2014, snapping up 1.20 million shares. They’ve now more than tripled that position according to the recent filing.
It’s the first bullish move and major position in Orbital among the funds we track here at Insider Monkey since George Soros’ Soros Fund Management had a 102 million shares stake in the company, which was eventually sold off during the first quarter of 2012. Orbital would hit a 5-year low a few months later.
As we reported during June, 2013, the funds we track were still relatively bearish on Orbital, as were insiders, despite (or perhaps because of) a strong start to 2013 that saw it rise over 14% during the first quarter. Our tracked funds became more bullish on the stock during the third quarter, and Orbital responded with a strong finish to the year, finishing up well over 50% for the year.
Last year was an up-and-down one for Orbital Sciences Corp (NYSE:ORB), a $1.82 billion market cap company, which builds rocket systems for commercial and military applications in the aerospace and defense industries. The year was characterized by the October 28 explosion of an unmanned Antares rocket bound for the International Space Station, shortly after liftoff from NASA’s Wallop Flight Facility. The “catastrophic failure”, as Orbital deemed it in a press release afterwards, sent their share price crashing 17% on October 29.
Orbital Sciences Corp (NYSE:ORB) announced the following month that they had reached a merger agreement with Alliant Techsystems Inc. (NYSE:ATK), a deal which was approved by the Justice Department on December 4. Both companies will conduct special meetings on January 27 to give their stockholders a chance to vote on the merger.
Roystone Capital made their move at an opportune time, as Orbital made a sharp upward move on January 22 after it was announced that they had signed a $1 billion deal with Russia’s RSC Energia to have that firm build up to 60 RD-181 engines for Orbital’s redesigned Antares rocket. Those engines will replace the aging AJ26 engines that were previously used, and also previously mocked by Tesla Motors Inc (NASDAQ:TSLA) and SpaceX’s Elon Musk. Orbital was up 11.54% for the week of January 19 to January 23, and is up 11.45% year-to-date.
Roystone Capital’s greatly increased position in Orbital would have made it their largest holding as of September 30, when Dollar General Corp. (NYSE:DG) was their most valuable holding with 1.27 million shares worth $77.86 million. Their position in Orbital is now worth $112.43 million. Other top holdings of Roystone’s as of September 30 were Cabelas Inc (NYSE:CAB) with 988,000 shares worth $58.24 million, and Anthem, Inc. (NYSE:ANTM), formerly Wellpoint Inc. They had 415,000 shares worth $49.64 million in the newly-named health insurance company.
Our tracked hedge funds were fairly bullish on Orbital Sciences Corp (NYSE:ORB) during the third quarter of 2014. In addition to the strong new position on the stock by Roystone during that quarter, Donald Chiboucis’ Columbus Circle Investors added over 100,000 shares to their position, giving them 919,837 total. Andrew Goldman’s Seven Locks Capital Management meanwhile upped their stake by 161% to 462,433 shares, while David S. Winter and David J. Millstone’s 40 North Management opened a new position with 161,707 shares.
Orbital Sciences Corp (NYSE:ORB) would approach their 52-week high during October, before the unfortunate launch explosion decimated their stock for more than a month. They have since recovered most of the value lost during that time, showing that the underlying metrics were solid, and that the funds properly anticipated positive growth for the company, which is why we track them and base our investing strategy on them.
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