Paul Singer is renowned for refusing to settle claims concerning the $1 billion that his Elliott Management is owed by the Argentinian government. He is also known for leveraging his $27 billion fund for activist campaigns against companies that he seeks to shake up and improve the operations of, thereby creating more shareholder value. In order to gauge how the activist firm’s stock picks performed in the first quarter, we did an analysis of the weighted average returns of Elliott Management’s equity picks which have a market cap of at least $1 billion. By this yardstick, a total of 42 holdings returned about 2.3% in the first three months of the year, outperforming the market. With that in mind, we’ll take a closer look at some of the fund’s top equity positions in this article and see how those stocks performed in the first quarter.
Our research determined that following the small-cap stocks, that hedge funds are collectively bullish on, can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).
#5 Cabelas Inc (NYSE:CAB)
– Shares Owned by Elliott Management (as of December 31): 4.17 Million
– Value of Holding (as of December 31): $194.63 Million
According to a 13D filing in February, Elliott further hiked its stake in the $3.3 billion retailer of hunting, fishing, camping and related outdoor merchandise to 6.05 million shares, along with additional exposure to 1.61 million shares through derivative agreements. What makes Cabelas Inc (NYSE:CAB) an alluring target for Elliott is the retailer’s healthy real estate portfolio, as it owns most of its stores. These could be sold for a quick injection of cash that could be used for growth initiatives, returned to shareholders, or a combination of both. The company recently announced that its Variable funding facility with Bank of America has been extended through March 2019 and was also increased to $500 million from $300 million. In its financial results for the fourth quarter, Cabelas managed to beat both the top and bottom-line estimates of analysts, which has contributed to its shares climbing by nearly 6% in the first quarter. Like Elliott Management, which initiated its stake in Cabelas during the fourth quarter, Richard Barrera‘s Roystone Capital Partners also initiated a stake in Cabelas Inc (NYSE:CAB) during the quarter, of 1.46 million shares.
#4 CDK Global Inc (NASDAQ:CDK)
– Shares Owned by Elliott Management (as of December 31): 8.05 Million
– Value of Holding (as of December 31): $381.93 Million
Elliott Management’s CDK Global Inc (NASDAQ:CDK) holding represented about 5% of the company’s outstanding stock as of December 31 and that stock dipped by over 2% during the first quarter. News that Elliott Management was seeking to take the $7.38 billion automotive software provider private in a leveraged buyout deal, surfaced last September. However, as nothing has been resolved on that front, the fund might be hoping that another private equity firm does the job instead, similar to what happened with Riverbed Technology in 2014. CDK beat both the top and bottom-line estimates with its financial results for the second quarter of fiscal year 2016, ending December 31. John Griffin‘s Blue Ridge Capital held about 6.15 million shares of CDK Global Inc (NASDAQ:CDK) at December’s end.
We study three more top stock picks of the activist investment firm on the next page.