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Activists Icahn and Ubben Take Profits Off the Table from Successful Campaigns, Plus 2 Other Activist Moves

Some players in the financial industry believe that most hedge fund managers like to advertise their stock picks, which might explain why hedge funds tend to move in packs on some occasions. This group movement is not necessarily bad for retail investors monitoring hedge funds, considering that the basket of most-owned stocks among hedge funds tends to outperform broader market benchmarks on a quarterly basis. Retail investors can monitor hedge fund activity by tracking 13D, 13G, or Form 4 filings, which usually offer useful insights about hedge funds’ stances on particular companies. The following article will discuss four such SEC filings submitted by several activist funds tracked by Insider Monkey.

Our backtests that covered the period between 1999 and 2012 showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

In a freshly-amended 13D filing, Glenn W. Welling’s Engaged Capital LLC disclosed owning 3.85 million shares of Magnachip Semiconductor Corp (NYSE:MX), which represent 11.1% of the company’s outstanding common stock. This is up from the 3.45 million-share position disclosed in the fund’s 13F filing for the October-to-December period. In February 2015, the South Korea-based chipmaker disclosed its restated financial results for fiscal years 2011 and 2012, as well as for the first three quarters of 2013, through a Form 10-K filing, after wrongly recognizing its revenue. In the second half of 2015, Engaged Capital claimed that Magnachip’s share price did not reflect the true value of its assets, mainly owing to the financial restatement process.

The designer and manufacturer of analog and mixed-signal semiconductor products generated net sales of $633.7 million in 2015, a decrease from $698.2 million in 2014 and $734.2 million in 2013. The decrease was mainly driven by lower demand for the company’s foundry services and the discontinuation of certain products by customers serving the smartphone market. Jonathan Lennon’s Pleasant Lake Partners, another activist invested in Magnachip Semiconductor Corp (NYSE:MX), has also stated its belief that the chipmaker was undervalued relative to its normalized earnings power and asset value. Shares of Magnachip are up by 7% over the past 12 months, after having gained nearly 2% year-to-date. The smart money sentiment towards Magnachip decreased in the final quarter of 2015, as the number of money managers with stakes in the troubled chipmaker declined to 14 from 21 quarter-over-quarter. Activist hedge fund Pleasant Lake Partners owns 3.42 million shares of Magnachip Semiconductor Corp (NYSE:MX) as of December 31.

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Let’s head to the next two pages of this article, where we cover three separate SEC filings submitted by the widely-known funds ValueAct Capital and Icahn Capital, as well as one from a lesser known firm.

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