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Outerwall Inc (OUTR): Engaged Capital Slashes Its Stake to 6.1%

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An amended 13D filing with the Securities and Exchange Commission revealed that Glenn W. Welling‘s Engaged Capital has significantly decreased its stake in Outerwall Inc (NASDAQ:OUTR), as it currently owns 1.05 million common shares, which amass 6.1% of the company’s outstanding stock. As disclosed in its previous 13D filing on the company, Engaged Capital held 2.43 million shares, which accounted for 14.1% of Outerwall’s float.

Outerwall is a company engaged in the business of retail, offering its customers self-service kiosks for renting movies and video games, while also running coin-cashing machines. Recently, the company signed a merger agreement with certain funds managed by Apollo Global Management LLC to be acquired by the private equity firm’s affiliates for approximately $1.6 billion. Given that, it’s not surprising to see Engaged Capital cut its position, as there is limited upside left in the stock.

Over the past 12 months, Outerwall’s shares have dropped by 20.09%. In its financial report for the second quarter of 2016, the company reported earnings per share from continuing operations of $2.38 and revenue of $518 million, beating both top- and bottom-line estimates of earnings per share of $1.37 and revenue of $487 million. Recently, B. Riley reiterated its ‘Buy’ rating on Outerwall’s stock, with a price target of $58.00, while Dougherty & Co downgraded its rating to ‘Sell’ from ‘Neutral’. 

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As per our hedge fund database, the number of investors long Outerwall (NASDAQ:OUTR) decreased by five in the first quarter, as at the end of March, the company was in 22 hedge funds’ portfolios. Aside from Engaged Capital, which held the most-valuable position in Outerwall (NASDAQ:OUTR), big investors were Debra Fine’s Fine Capital Partners, which held the second-largest stake worth $50.9 million. Some other peers with similar bullishness included Allan Mecham and Ben Raybould’s Arlington Value Capital, and Joel Greenblatt’s Gotham Asset Management. Hedge funds that dumped Outerwall (NASDAQ:OUTR) during the quarter were William C. Martin’s Raging Capital Management and James Dondero’s Highland 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 296,960 296,960 296,960 1.7%
Engaged Capital Co-Invest III 716,307 716,307 716,307 4.2%
Engaged Capital Flagship Fund 296,960 296,960 296,960 1.7%
Engaged Capital Flagship Fund, Ltd 296,960 296,960 296,960 1.7%
Engaged Capital 1,054,923 1,054,923 1,054,923 6.1%
Engaged Capital Holdings 1,054,923 1,054,923 1,054,923 6.1%
Glenn W. Welling 1,054,923 1,054,923 1,054,923 6.1%

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. 5)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 9, 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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