A protege of billionaire Carl Icahn, Keith Meister founded Corvex Capital in 2011, managing to attract $250 million in seed money from George Soros. The fund currently manages roughly $12.6 billion worth of assets, with more than half of that invested in U.S. equity positions. At the end of the second quarter, the fund’s U.S equity portfolio was valued at $7.47 billion, 33% of which was invested in consumer discretionary stocks, while financial stocks amounted to 32% of the portfolio’s value. Keith Meister and Corvex Capital’s war with the management of Williams Companies Inc (NYSE:WMB) has held the headlines for a long time, while some of their other moves have gone under the radar.
In this article we’ll take a look at some of the tweaks that Mr. Meister and his team made to their fund’s equity portfolio during the second quarter, with an eye on boosting their performance during the third quarter.
At Insider Monkey, we track over 765 hedge funds, whose quarterly 13F filings we analyze to determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (read more details here).
Dumps Pfizer After Merger Failure
First up is Pfizer Inc. (NYSE:PFE), the pharmaceutical giant that was on the brink of sealing one of the largest takeovers of all time. The company’s $160 billion deal to takeover Allergan plc Ordinary Shares (NYSE:AGN) was abandoned in April due to new tax regulations from the Treasury Department that made tax-inversion mergers less profitable. During the second quarter, Corvex Capital unloaded 17.5 million shares of Pfizer Inc. (NYSE:PFE) as the highly anticipated deal collapsed. Soon after that, Pfizer Inc. (NYSE:PFE) turned to smaller American biotechnology companies to look for takeover candidates and has offered to acquire Anacor Pharmaceuticals Inc (NASDAQ:ANAC) for $5.2 billion or $99.25 per share in cash. The company makes Kerydin, a topical treatment for toenail fungus, and is also waiting on the FDA approval for crisaborole, an ointment for the treatment of atopic dermatitis and psoriasis.
Boosted Bet On TeamHealth
Next up is TeamHealth Holdings Inc (NYSE:TMH), a provider of healthcare professional staffing and administrative services. During the second quarter, Keith Meister and his team increased the size of their investment in the company by 84% to 2.76 million shares valued at approximately $112 million. So far this year, the stock has continued its decline, despite a couple of short rallies. Shares are currently trading at $35 apiece, down by 19% year-to-date. TeamHealth Holdings Inc (NYSE:TMH) has a market cap of $2.6 billion and is currently trading at a trailing P/E ratio of 58, twice the industry average P/E of 29, according to data compiled by Yahoo! Finance. For the second quarter, the company posted a profit of $18.8 million, or $0.66 per share when adjusted for one-time costs, and $1.12 billion in revenue, mostly in-line with analysts’ projections of $1.17 billion in revenue and earnings of $0.66 per share. Barry Rosenstein is also keeping an eye on TeamHealth Holdings Inc (NYSE:TMH), as his fund JANA Partners held 5.89 million shares of the company at the end of June, a position valued at $239 million.
We’ll take a look at three more of the activist investor’s biggest moves during the second quarter on the next page.