Activist Tom Sandell’s Newest Targets

Sandell Asset Management is a hedge fund that was founded in 1998 by activist investor Tom Sandell, who is currently the fund’s manager. Sandell is reputed for employing a multi-strategy and event-driven approach to his investmenting. His fund possesses a diversified portfolio, with investments in technology, healthcare, and services stocks, among other sectors. Sandell Asset Management recently submitted its 13F filing for the June 30 period, giving insight into its latest moves and potential activist targets. The fund had $942.48 million in public equity portfolio value, representing a $77.60 million decrease compared to the previous quarter. The filing also showed that the fund made new investments in Akorn, Inc. (NASDAQ:AKRX), Computer Sciences Corporation (NYSE:CSC), and Windstream Holdings, Inc. (NASDAQ:WIN), and we’ll look at each of these stocks below.

Thomas Sandell

Following activist funds like Sandell Asset Management is important because it is a very specific and focused strategy in which the investor doesn’t have to wait for catalysts to realize gains in the holding. A fund like Tom Sandell’s can simply create its own catalysts by pushing for them through negotiations with the company’s management and directors. In recent years, the average returns of activists’ hedge funds have been much higher than the returns of an average hedge fund. Furthermore, we believe do-it-yourself investors have an advantage over activist hedge fund investors because they don’t have to pay 2% of their assets and 20% of their gains every year to compensate hedge fund managers. We have found through extensive research that the top small-cap picks of hedge funds are also capable of generating high returns and built a system around this premise. In the 35 months since our small-cap strategy was launched it has returned 118% and beaten the S&P 500 ETF (SPY) by more than 60 percentage points (read more details).

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During the second quarter, Sandell Asset Management initiated a position of 532,920 shares with a market value of $23.27 million in Akorn, Inc. (NASDAQ:AKRX), an investment that brought the stock to position nine in the fund’s portfolio. The multi-source generic drugs manufacturer launched Acetylcysteine Injection in a 6g/30mL concentration, in 30mL single-dose vials. The drug is used for the treatment of acetaminophen overdose and was approved by the U.S. Food and Drug Administration (FDA) in March of this year under an Abbreviated New Drug Application (ANDA). Akorn, Inc. (NASDAQ:AKRX) and some of its officers and directors are currently being investigated by a law firm on behalf of investors over a possible breach of securities laws. Among the funds we track, Consonance Capital Management, managed by Mitchell Blutt, was long in the stock as of June 30, holding 1.84 million shares valued at $80.50 million. Healthcor Management LP, headed by Arthur B Cohen and Joseph Healey, held 1.73 million shares valued at $75.31 million on the same date.

Another stock in which Sandell Asset Management opened a new position in during the second quarter is Computer Sciences Corporation (NYSE:CSC). The fund purchased a total of 260,700 shares of the company, which held a market value of $17.11 million at the end of the quarter. The company is an international provider of information technology and professional services. Computer Sciences Corporation (NYSE:CSC) is set to split into two publicly-traded companies, a process expected to be finalized by October 2015. The company also announced on August 11 that it had entered into an agreement to acquire Fruition Partners, which is an IT firm specialized in the provision of technology-enabled solutions. JANA Partners, steered by Barry Rosenstein, was also long in the stock at the end of June, owning 8.04 million shares with a market value of $527.62 million after raising its stake by 8% during the second quarter. John Paulson‘s Paulson & Co and Ken Griffin’s Citadel Investment Group are some of the other funds we track that held notable positions in the stock.

The last stock that we are looking into is Windstream Holdings, Inc. (NASDAQ:WIN). During the second quarter, Sandell Asset Management initiated a 2.57 million-share position in the stock, valued at $16.41 million as of the reporting period, with the move elevating Sandell to the top shareholder position of the company within our database. When Windstream Holdings, Inc. (NASDAQ:WIN) created asset-management company Communications Sales & Leasing Inc (NASDAQ:CSAL), investors were left confused as to which side had value, which led to a decline in the company’s share price. However, after it reported strong second quarter results, investors found a breather, seeing the share price climb again. Nevertheless, the road has been bumpy for the company, particularly in the consumer business, something that prompted it to announce a plan to launch premium speeds for subscribers, with the intention of attracting more of them. Windstream Holdings is planning to sell its 20% stake in Communications Sales & Leasing, which is currently valued at $624 million, in order to reduce its debt. At the end of the second quarter, billionaire David E. Shaw‘s D E Shaw was long in the stock with 1.96 million shares valued at $12.48 million after raising its position by 6,561% during the quarter. Billionaire Israel Englander’s Millennium Management also held 1.86 million shares with a value of $11.84 million after it reduced its stake in the stock by 41% during the quarter.

Disclosure: None