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William Lyon Homes (WLH), Yahoo! Inc. (YHOO), Sunedison Inc (SUNE): Luxor Capital’s Latest Moves

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In a recent 13D filing, Christian Leone of Luxor Capital Group disclosed considerably reducing his fund’s stake in William Lyon Homes (NYSE:WLH). Leone sold 1.90 million shares of the designer, constructor, and seller of single family homes in California, Arizona and Nevada at $22.58 per share. Luxor continues to hold  about 4.39 million shares of William Lyon, which has the fund’s ownership of the company at 16%.

Christian Leone

Christian Leone founded Luxor Capital in 2002 based on a philosophy of investing in distressed companies rather than employing a value-based approach. The fund’s investments are primarily in the finance and consumer discretionary sectors, where the former forms 32.5% , and the latter 30.7% of the fund’s portfolio value. Luxor’s regulatory assets under management amounted to $10.73 billion at the end of the year, while the fund’s equity portfolio was valued at $4.96 billion at the end of the fourth quarter.

According to the latest 13F filing, William Lyon Homes (NYSE:WLH)’s stake in Leone’s portfolio had remained unchanged at 6.30 million shares valued at $127.60 million during the fourth quarter. Although up 10% year-to-date, the stock is down about 25% over the last 52 weeks. William Lyon Homes acquired the privately held Polygon Northwest in June last year. Although strategically appealing, the deal has raked up significant leverage on the home builder’s balance sheet. Given that the company went bankrupt as recently as 2011, this paints a very discouraging picture for potential investors.

There were three companies during the fourth quarter that Leone was extremely optimistic about  and initiated significant stakes in; they were Yahoo! Inc. (NASDAQ:YHOO), Sunedison Inc (NYSE:SUNE) and Liberty Global plc (NASDAQ:LBTYK).

Yahoo! Inc. (NASDAQ:YHOO) was also Luxor’s largest holding according to the latest 13F filing. Leone initiated a new position in the global technology company purchasing 9.22 million shares valued at $465.61 million. The position constituted a significant 9.38% of Luxor’s portfolio value. The company’s stock is up nearly 5% over the last year.

Both D.E. Shaw and James Dinan’s York Capital Management owned shares in the web giant, 13.53 million shares and 9.34 million shares respectively, valued at $683.75 and $474.69 million. From the 737 hedge funds that we track at Insider Monkey, 99 had invested in Marissa Mayer’s company as compared to 94 a quarter earlier.

The question of a potential tax free spin-off of its 15% Alibaba Group Holding Ltd (NYSE:BABA) stake had been looming over Yahoo’s management for quite a while. The company delivered to its shareholders on not only that count but also reported Earnings per Share (EPS) of $0.30 during the fourth quarter, which was a penny higher than the estimates while meeting analysts’ expectations with $1.25 billion of revenue.

Liberty Global plc (NASDAQ:LBTYK) was the second largest position initiated by Leone. The stake comprised of 5.15 million shares valued at $248.72 million formed 5.01% of his fund’s portfolio value. Out of the 59 billionaires that we track at Insider Monkey, 12 had investments in the provider of broadband internet, cable TV, fixed-line telephony and mobile services. Warren Buffett‘s Berkshire Hathaway and D E  Shaw were two such investors, both of which increased their stakes in Liberty Global plc (NASDAQ:LBTYK) by 4% and 7% respectively. Their corresponding positions stood at 7.35 million shares valued at $354.93 million and 11.14 million shares valued at $538.24 million.

Although the stock is down 36.9% over the year, it is up 10.4% year-to-date, despite fourth quarter financial results failing to meet analysts’ expectations. Revenues of $4.61 billion were about $35 million lighter than expected and the net loss per share of $0.62 didn’t compare very favorably with the expected EPS of $0.02.

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