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Outerwall Inc (OUTR): Engaged Capital Continues to Unload Stake

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We wrote recently about Glenn W. Welling‘s Engaged Capital slashing its stake in Outerwall Inc (NASDAQ:OUTR) to 6.1%, after the company inked a merger agreement with Apollo Global Management. The fund has since slashed its stake further, as it counts ownership of just 90,003 common shares, which amass less than 1% of Outerwall’s outstanding stock, according to the activist fund’s latest amended 13D/A filing with the SEC. Given the merger agreement, Engaged Capital’s move to further unwind its stake was somewhat expected, as it takes profit from its position, which was initiated during the fourth quarter of 2015. Shares slumped hard late in that quarter, offering a great entry point for investors, and Engaged Capital heavily added to its stake in the first quarter as shares hit five-year lows.

Outerwall is a retail operator that owns and runs special self-service kiosks for renting video games and movies, as well as coin cashing machines. Year-to-date, the company’s stock is up by 41.84%. For the second quarter of 2016, Outerwall disclosed earnings per share from continuing operations of $2.38 and revenue of $518 million, topping the estimates of $1.37 for EPS and $487 million for revenue. At the end of July, B. Riley reiterated its ‘Buy’ rating on Outerwall’s stock, with a price target of $58, while Dougherty & Co downgraded its rating to ‘Sell’ from ‘Neutral’.

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Outerwall’s investors in our database at the end of the second quarter included Debra Fine’s Fine Capital Partners, with a position valued at $51.25 million, Allan Mecham and Ben Raybould’s Arlington Value Capital, which held $43.66 million worth of shares, and Philippe Laffont’s Coatue Management. Some of the smart money managers who decided to dump Outerwall (NASDAQ:OUTR) during the second quarter, included Paul Marshall and Ian Wace’s Marshall Wace LLP, which sold its position valued at almost $1.5 million on March 31, Mario Gabelli’s GAMCO Investors, which said goodbye to a $344,000 holding, and Benjamin A. Smith’s Laurion Capital Management.

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You can access the original SEC filing by clicking here.

Ownership Summary Table

Name Sole Voting Power Shared Voting Power Sole Dispositive Power Shared Dispositive Power Aggregate Amount Owned Power Percent of Class
Engaged Capital Flagship Master Fund 25,333 25,333 25,333 Less than 1%
Engaged Capital Co-Invest III 61,116 61,116 61,116 Less than 1%
Engaged Capital Flagship Fund 25,333 25,333 25,333 Less than 1%
Engaged Capital Flagship Fund, Ltd 25,333 25,333 25,333 Less than 1%
Engaged Capital 90,003 90,003 90,003 Less than 1%
Engaged Capital Holdings 90,003 90,003 90,003 Less than 1%
Glenn W. Welling 90,003 90,003 90,003 Less than 1%

Glenn W. Welling
Glenn W. Welling
Engaged Capital

Page 1 of 13 – SEC Filing

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
§ 240.13d-2(a)
(Amendment No. 6)1
Outerwall Inc.
(Name of Issuer)
Common Stock, $0.001 par value per share
(Title of Class of Securities)
690070107
(CUSIP Number)
GLENN W. WELLING
ENGAGED CAPITAL, LLC
610 Newport Center Drive, Suite 250
Newport Beach, California 92660
(949) 734-7900
STEVE WOLOSKY
OLSHAN FROME WOLOSKY LLP
1325 Avenue of the Americas
New York, New York 10019
(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)
August 16, 2016
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.
Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See § 240.13d-7 for other parties to whom copies are to be sent.
_______________
1              The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

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