Adobe Systems Incorporated (ADBE): ValueAct Sells Some More Shares as Stock Surges on the Back of Strong Financial Results

A new filing with the Securities and Exchange Commission showed that Jeff Ubben‘s ValueAct Capital has reduced its stake in Adobe Systems Incorporated (NASDAQ:ADBE). The fund reported the disposal of 2.08 million shares of the company in two transactions on December 15 and 17 respectively, at an average price of $74.42 per unit. Following the sale, ValueAct holds close to 21.79 million shares. The stake is activist by nature and amasses 4.37% of the company’s common stock.


ValueAct Capital is a fund that employs a long-term approach to its investments. The fund was founded in 2000 by the former managing partner at Richard Blum‘s Blum Capital Partners and it prefers to hold a position for an average period of three years and usually it has a concentrated equity portfolio (worth $14.9 billion at the end of September) with around 15 positions and usually adds three to four new stakes during one year. ValueAct has been holding Adobe Systems Incorporated (NASDAQ:ADBE) since the first quarter of 2011, initially disclosing ownership of 625,000 shares. However, in the last year and a half the fund has been trimming its exposure to the stock, but it still has a representative on the board of directors of the company.

Adobe Systems Incorporated (NASDAQ:ADBE) is a $37 billion application software company, whose stock appreciated by more than 25% since the beginning of the year and it gained more than 130% since ValueAct added it to its equity portfolio. However, amid the stock price growth, the company has seen a reduction of the funds stakes. As our data show, out of more than 700 investors that we track at Insider Monkey, 40 funds disclosed holding long positions in Adobe at the end of the third quarter, down from 47 funds in the previous quarter. In addition, the aggregate value of the shares held by the funds tracked by us fell by $1.99 billion over the quarter to $2.67 billion.

ValueAct is one of the funds that reduced its stake by 3% during the third quarter, but is still the largest shareholder of Adobe Systems Incorporated (NASDAQ:ADBE) in our list. It is followed by Stephen Mandel‘s Lone Pine Capital and Philippe Laffont‘s Coatue Management, which trimmed their positions by 4% and 6% to some 11.47 million shares and 5.01 million shares respectively.

The latest reduction in ValueAct’s stake comes a couple of days after the company announced its financial results for the fourth quarter and full fiscal year 2014. For the fiscal year, Adobe Systems Incorporated (NASDAQ:ADBE)’s revenue went up to $4.15 billion, from $4.06 billion for the previous year, but its net income slid to $0.51 per share, from $0.56. As earnings managed to beat the expectations and revenue came slightly below the consensus estimates, the stock of the company appreciated by 7% since the company reported its financial results.

Moreover, on the back of financial results many analysts raised their price targets for Adobe Systems Incorporated (NASDAQ:ADBE)’s stock, which sent it up last Friday. Among others, Deutsche Bank, Jeffries and Citigroup raised their price targets to $85.00, $90.00 and $93.00 respectively, keeping ‘Buy’ ratings.

Disclosure: none