In this article, we will discuss 5 stock picks of Nathaniel August’s Mangrove Partners. If you want to read our detailed analysis of these stocks, you can go directly to 10 Stock Picks of Nathaniel August’s Mangrove Partners.
5. Shaw Communications Inc. (NYSE:SJR)
Mangrove Partners’ Stake Value: $18,471,000
Percentage of Mangrove Partners’ 13F Portfolio: 1.90%
Number of Hedge Fund Investors: 23
Shaw Communication Inc. (NYSE:SJR) is one of the biggest Canadian telecom companies with an emphasis on the western parts of the company and a strong presence in Alberta. The Edmonton-based company is in the middle of a takeover by Rogers Communications Inc for $16.16 billion. The price offered by Rogers Communication assumed a significant premium. The buyout has been approved by Shaw Communication Inc.’s (NYSE:SJR) shareholders but is pending the final go-ahead from the concerned regulatory authorities.
On November 8, RBC Capital upgraded Shaw Communication Inc. (NYSE:SJR) to Outperform from Sector Perform with a price target of C$40.50.
4. Coherent, Inc. (NASDAQ:COHR)
Mangrove Partners’ Stake Value: $19,691,000
Percentage of Mangrove Partners’ 13F Portfolio: 2.02%
Number of Hedge Fund Investors: 43
Coherent, Inc. (NASDAQ:COHR) is a producer of lasers and photonics technology. The Silicon Valley-based company agreed to be acquired by II-VI Incorporated (NASDAQ:IIVI) in March 2021.
Nathaniel August’s Mangrove Partners held 74,493 shares in Coherent, Inc. (NASDAQ:COHR) at the end of the second quarter of 2021, worth nearly $19.7 million. Overall, 43 hedge funds reported owning a stake in Coherent, Inc. (NASDAQ:COHR) at the end of Q2, up from 41 in the first quarter.
In October, Stifel resumed coverage on Coherent, Inc. (NASDAQ:COHR) with a Hold rating and a price target of $270, underlining the II-VI (IIVI) acquisition price. Analyst Patrick Ho noted “synergies in both revenue and cost from this deal.”
Carillon Tower Advisers discussed its stance on Coherent, Inc. (NASDAQ:COHR) in its Q1 2021 investor letter. Here’s what the investment management firm said:
“Coherent is an international company that designs and manufactures a variety of laser-based photonic products, and is also a key equipment supplier in the production of organic light emitting diode (OLED) screens. The firm’s shares saw a sizable gain after it was announced in mid-January that Coherent would be acquired for a notable premium. After a contentious bidding process between two rival firms drove the share price higher with each successive bid, Coherent ultimately agreed to terms in a cash and stock deal.”
3. Magnachip Semiconductor Corporation (NYSE:MX)
Mangrove Partners’ Stake Value: $23,675,000
Percentage of Mangrove Partners’ 13F Portfolio: 2.43%
Number of Hedge Fund Investors: 35
Magnachip Semiconductor Corporation (NYSE:MX) is a South Korean developer and producer of analog and mixed-signal semiconductor platform solutions for consumer and industrial products. Magnachip Semiconductor Corporation (NYSE:MX) owns more than 1,200 registered patents.
Magnachip Semiconductor Corporation (NYSE:MX) reported an EPS of $0.42 for Q3 2021, beating the analysts’ estimate by $0.22.
2. Macquarie Infrastructure Holdings, LLC (NYSE:MIC)
Mangrove Partners’ Stake Value: $32,230,000
Percentage of Mangrove Partners’ 13F Portfolio: 3.31%
Number of Hedge Fund Investors: 34
Macquarie Infrastructure Holdings, LLC (NYSE:MIC) is a limited liability company treated as a partnership for tax benefit purposes. Earlier in 2021, the New York-based diversified infrastructure company had announced to dispose of various assets and reorganize itself. In the second quarter, Mangrove Partners held 842,164 shares in Macquarie Infrastructure Holdings, LLC (NYSE:MIC), worth $32.2 million.
1. Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH)
Mangrove Partners’ Stake Value: $53,759,000
Percentage of Mangrove Partners’ 13F Portfolio: 5.53%
Number of Hedge Fund Investors: 36
Mangrove Partners’ highest stake is in Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH). The Delaware-based company is listed as a special purpose acquisition company (SPAC) backed by famous activist investor and hedge fund manager, Bill Ackman.
Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH) is a creative SPAC, in the sense that stockholders who do not opt to redeem their investment as part of the SPAC transaction will receive extra warrants and down the line, they will receive more warrants from anyone else who redeems his warrant.
The SPAC went forward with the listing of the Universal Music Group (UMG) but the deal collapsed due to regulatory challenges. Following this, a lawsuit was brought up in August 2021 against Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH) for acting as an investment firm. The lawsuit was an attack on all the companies in the SPAC universe and is not only limited to Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH).
In response, Bill Ackman sent out a letter to the shareholders of Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH) stating that he will give back $20 per share to the shareholders of PSTH. Furthermore, a warrant will also be given out, which can be exercised when the SPAC is making an acquisition.
Alphyn Capital Management mentioned Pershing Square Tontine Holdings, Ltd. (NYSE:PSTH) in its Q3 2021 investment letter. Here’s what the firm said:
“PSTH is a high-profile SPAC created by noted hedge fund investor Bill Ackman. I initiated a position soon after the company announced a deal, since abandoned, to buy a 10% stake in Universal Music Group ahead of its spinout from parent holding company Bollore. PSTH had been widely expected to pursue a marquee deal with some trophy tech company, such as Bloomberg L.P. or Stripe, the payments company, valued at $95bn in April, and the shares traded at a 60% premium during the SPAC frenzy of the early part of the year. Instead, PSTH announced a complex, multi-part transaction for an old-school music business, and we were able to purchase shares at a small premium to NAV. PSTH intended to buy 10% of UMG for $4bn and spin this into a separately traded company listed in Europe, creating a tracking stock that presumably would have merged into UMG at some future point. PSTH “remainco” would still have access to approximately $3bn to pursue another deal. Finally, PSTH shareholders would be given 5-year warrants to a new company called a “SPARC,” which would seek a 3rd acquisition target.
I believed PSTH’s components were worth more than the approximately $21.80 a share that PSTH traded for at the time. More importantly, UMG is an attractive asset with a 31% share of the global music market, the largest operator in a 3-way oligopoly with Sony Music and Warner Music. Streaming has transformed music into a growth industry, as companies like Apple, Amazon, Spotify, and TikTok have invested significant sums in building global music distribution platforms. UMG earns attractive high-margin royalties, and its extensive, irreplaceable back catalog of some of the most popular songs globally, valued as much as $50bn, positions it well within this ecosystem.
Unfortunately, the SEC did not approve the deal, and a subsequent shareholder lawsuit has further complicated matters. The net result is that PSTH abandoned the UMG deal and now wants to return cash to shareholders at $20/share and still issue SPARC warrants. Thus, assuming PSTH gets approval for its latest plan, we would receive most of our investment back and retain a 5-year option on a future deal, which is not a bad consolation prize.”
You can also take a peek at the 10 Safe Stocks To Invest in For Long Term and 10 Best Nano Cap Stocks To Buy in 2021.
