James Dinan founded his York Capital investment firm in 1991 with a mere $3.6 million; his firm now has some $15 billion in assets under management. Prior to starting York Capital, Dinan worked at DLJ for two years, and in merger-arbitrage at Kellner DiLeo. Outlined below are some of the buys and sells that York Capital made during the first quarter that I found interesting (check out York’s portfolio).
York sold off General Growth Properties Inc (NYSE:GGP), which was 3.8% of the fund’s portfolio. General Growth Properties Inc (NYSE:GGP) is one of the oldest and most experienced shopping center owners, developers and managers in the U.S. However, the dividend yield for the REIT is a mere 2.6%.
Going into the second quarter, there were a total of 22 hedge funds long on the stock. This includes the top hedge fund owner by market value, billionaire investor Bill Ackman, who has been a big owner of General Growth Properties Inc (NYSE:GGP) since it spun off Howard Hughes in 2010. Ackman’s position is worth close to $1.5 billion and accounts for 14.8% of Ackman’s portfolio (check out Ackman’s latest picks).
Another one of York’s big selloffs was Citigroup Inc. (NYSE:C), which had been 2.6% of York’s portfolio. One problem with Citi is the recent run up in the stock. Citi is up more than 100% in the last 12 months and now trades with a P/E of 18.7, well above Wells Fargo & Co (NYSE:WFC) at 11.6 and JPMorgan Chase & Co. (NYSE:JPM) at 9.7.
Yahoo! Inc. (NASDAQ:YHOO) saw York sell off its entire position during the first quarter, which had been 3.1% of the fund’s portfolio. This comes after Yahoo! Inc. (NASDAQ:YHOO) has run up 32% year-to-date. The growth is related to a boost in valuation from the sell-off of part of its Asian assets; however, the robust competition in online advertising still presents headwinds for the company, as Google Inc (NASDAQ:GOOG) continues to dominant the majority of Yahoo! Inc. (NASDAQ:YHOO)’s markets.
In other big news, Yahoo! Inc. (NASDAQ:YHOO) snatched up Tumblr, which has more than 100 million users and little revenue, for $1.1 billion late last month. This is another reason I would be hesitant about the stock. The $1.1 billion price tag is sizable and the success of the acquisition will be in large part a result of how Yahoo! goes about monetization.
The wrong route would be trying to squeeze revenue out of Tumblr immediately. The platform has a solid user base, but has much more room to grow and could be just what Yahoo! Inc. (NASDAQ:YHOO) needs to break into mobile. Thus, Yahoo! must be willing to bide its time, much like Google Inc (NASDAQ:GOOG) has done with YouTube. Yahoo! is also one of the stocks that Passport Capital added to its portfolio last quarter (check out the others).
A couple of notable new additions for York Capital were CBRE Group Inc (NYSE:CBG) and Vulcan Materials Company (NYSE:VMC), making up 3.3% and approximately 1.7% of York’s portfolio, respectively, at the end of Q1. CBRE Group Inc (NYSE:CBG) is one of the leading commercial real estate services firms, providing valuation, real estate investment management, tenant representation and property leasing services.
The poor economic environment and real estate crisis put a strain on CBRE Group Inc (NYSE:CBG) over the past few years, but the company is rebounding nicely. The real estate servicer saw year-over-year EPS growth of 14% for 1Q 2013, 20% for 4Q 2012, 8% for 3Q 2012 and 20% for 2Q 2012.
Given the rebounding real estate market, improving vacancy rates and low-cost credit, the company should reward investors nicely over the interim. From a returns standpoint, CBRE Group Inc (NYSE:CBG) has a return on equity that’s impressive, at 25.5%, compared to the industry average of 20.7%. During the first quarter of 2013, CBRE Group Inc (NYSE:CBG) signed 46 contract in its global corporate services, of which 22 were with new clients.