Adage Capital’s Biggest Q2 Moves As It Adjusts to “Factor-Based Investing”

Schlumberger Limited. (NYSE:SLB)

– Shares Owned by Adage Capital Management (as of June 30): 2.16 million

– Value of Adage Capital Management’s Holding (as of June 30): $170.64 million

Schlumberger Limited. (NYSE:SLB) was a big new addition to Adage Capital Management’s equity portfolio during the quarter. The fund acquired around 2.16 million new shares of the oil and gas exploration giant through that company’s acquisition of Cameron International Corporation (NYSE:CAM) during the second quarter, of which Adage Capital owned 4.49 million shares of on March 31. Back in April, Schlumberger closed its acquisition of Cameron International, the terms of which entitled Cameron stockholders to receive 0.716 shares of Schlumberger common stock and $14.44 in cash, in exchange for each Cameron share. Based on the size of its Cameron holding, that means Adage Capital would’ve received 3.21 million shares of Schlumberger, which means the fund either sold some shares of Cameron before the deal was closed, or sold 1.05 million shares of Schlumberger after it was closed (or a combination of both).

Schlumberger Limited. (NYSE:SLB) topped second quarter estimates with $0.23 in EPS and $7.16 billion in revenue. Financial services firm Jefferies reiterated a ‘Hold’ rating for Schlumberger shares but increased its price target on them to $88.00 from $85.00, following the earnings report. Schlumberger’s stock has gained over 20% since the start of 2016. Ken Fisher’s Fisher Asset Management owned 4.21 million shares of the company as of the end of the second quarter.

Adage Capital Sells Off Sabre Corp (NASDAQ:SABR)

Adage Capital sold out of its stake of 1.89 million shares of Sabre Corp (NASDAQ:SABR) during the second quarter. Shares of the company are flat since the end of the second quarter after rising steadily through July, but slumping hard on August 2 after the release of the company’s second quarter results. Quarterly year-over-year growth was solid, with revenue rising by 20% to $845 million, adjusted EBITDA jumping by 19% to $271 million, and adjusted EPS leaping by 37% to $0.37. The technology solutions provider for the travel industry debuted four new or upgraded solutions during the quarter, including Commercial Analytics and Revenue Optimizer. It’s unclear why shares tumbled so heavily following the earnings results, as EPS slightly topped estimates, while revenue slightly missed. Sabre Corp (NASDAQ:SABR)’s results also led to some selling in the shares of travel stocks such as Priceline Group Inc (NASDAQ:PCLN).

Target Corporation (NYSE:TGT) Removed From Adage’s Portfolio

Adage Capital unloaded 100% of its stake in Target, selling 919,148 shares of the company in the April-to-June period. The stake had accounted for about 0.21% of the value of the hedge fund’s diversified equity portfolio. Target Corporation (NYSE:TGT) shares are under heavy pressure after the company trimmed its full-year guidance, citing a “difficult” retail environment. The Minnesota-based discount retailer earned $1.23 per share on $16.2 billion in revenue for the second quarter, better than analysts’ forecasts of $1.12 per share on $16.18 billion in revenue. However, for the full-year, the company lowered its EPS guidance to $4.80-to-$5.20, a step down from the prior guidance of $5.20-to-$5.40, and beneath the consensus of $5.13 at the mid-point of the new range.

Disclosure: None