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Activist Investment Firm Takes Some Profits off the Table from Successful Investment in Six Flags

In a separate Form 4 filing, Rehan Jaffer’s H Partners Management LLC reported selling 175,000 shares of Six Flags Entertainment Corp (NYSE:SIX) on Friday, at prices varying between $59.90 and $60.10 per share. H Partners currently owns 14.46 million shares of Six Flags, which make up 15.50% of the company’s outstanding shares. The largest regional theme park operator in the world entered into bankruptcy protection in June 2009, surrendering to a mix of long-term indebtedness and swelling losses from operations. However, the company emerged from bankruptcy in May 2010 and H Partners has played an important role in the company’s subsequent turnaround story. Six Flags Entertainment Corp (NYSE:SIX)’s shares have returned an impressive 527% since May 2010 and 25% in the past year alone, so it is no wonder why the activist investment firm is selling shares.

The company currently owns and operates 18 theme and water parks, of which 16 are located in the United States, one in Mexico, and one in Canada. In February, the company revealed plans to open and operate a water park in Mexico that has been closed for several years, with plans to open it to the public in early 2017. Six Flags intends to invest $15 million-to-$18 million in the property, in addition to the company’s original plan of spending 9% of annual revenue on capital expenditures during 2016.

Six Flags shares are currently changing hands at around 28.2-times expected earnings, above the forward P/E multiple of 14.8 for the movies and entertainment sector and the ratio of 17.7 for the S&P 500 gauge. Joel Greenblatt’s Gotham Asset Management acquired a new stake of nearly 656,000 shares of Six Flags Entertainment Corp (NYSE:SIX) during the December quarter.

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