ValueAct Capital Keeps Portfolio Largely Unchanged, Adds Stake In Cybersecurity Firm

Allison Transmission Holdings Inc (NYSE:ALSN)

– Shares Held By ValueAct Capital (as of December 31): 10.52 Million

– Value of The Holding (as of December 31): $354.59 million

With ValueAct Capital reducing its stake in Allison Transmission Holdings Inc (NYSE:ALSN) by 44% during the fourth quarter, the company dropped three positions in the fund’s portfolio during that period and became its eleventh largest holding, in terms of value, at the end of December. The fund had initiated a stake in the company during third quarter of 2013 and signed a cooperation agreement with it in December 2014. In a recent regulatory filing, ValueAct revealed that it has agreed to sell the remaining 10.52 million shares it owns back to the company at a price of $34.50 per share.  Allison Transmission Holdings Inc (NYSE:ALSN)’s stock ended the fourth quarter up by over 17% and most of those gains came after Barron’s published an article on November 5 that proclaimed the stock could see a 25% upside. This year too, Allison’s stock has continued its upward march by rising 10.54% year-to-date. However, most analysts now consider the stock, which is currently trading at a forward price-to earnings multiple of 20.88, to be reasonably valued.

Morgan Stanley (NYSE:MS)

– Shares Held By ValueAct Capital (as of December 31): 26.90 Million

– Value of The Holding (as of December 31): $1.13 billion

Having initiated its position in Morgan Stanley (NYSE:MS) during the second quarter of 2016, ValueAct Capital decided to book some of its profit in the company during the fourth quarter by lowering its holding 35%. One can’t blame ValueAct for that decision as Morgan Stanley (NYSE:MS)’s stock has appreciated by over 50% since the end of 2016. This feat becomes even more astonishing if one takes into account the size of Morgan Stanley (NYSE:MS), which is considered one of the foremost financial institutions in the world. Although some analysts believe that this recent run up in the stock has made the stock slightly overvalued, most of them continue to remain bullish on the company citing favorable economic outlook and rising rate environment. On February 7, analysts at Daiwa Capital Markets upgraded Morgan Stanley (NYSE:MS)’s stock to ‘Outperform’ from ‘Hold’.