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Clifton S. Robbins

Clifton S. Robbins’ Blue Harbour Group has increased its position in Rackspace Hosting Inc. (NYSE:RAX), a new filing with the U.S. Securities and Exchange Commission shows. The activist stake was raised to 11.36 million shares from 9.18 million shares the fund held at the end of the first quarter. According to the filing, Blue Harbour Group’s stake in Rackspace Hosting Inc. (NYSE:RAX) is equivalent to 8.0% of the company’s outstanding common stock. Based in Texas, Rackspace Hosting Inc. (NYSE:RAX) is a managed cloud company with a market cap of $4.3 billion.

Clifton Robbins Blue Harbour

Greenwich-based Blue Harbour Group was founded by Clifton S. Robbins in 2004. Previously, Robbins worked at major private equity firms such as KKR & Co, and General Atlantic. Robbins uses a completely collaborative activist approach by working with the management teams of the companies he invests in to build and create shareholder value. At the end of March, Blue Harbour’s public equity portfolio contained $3.3 billion in holdings. As of March 31, the fund had a strong focus on technology and industrial goods stocks, with technology accounting for 36% of its portfolio value.

Clifton S. Robbins
Clifton S. Robbins
Blue Harbour Group

We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular stock picks in real time since the end of August 2012. These stocks have returned 123% since then and outperformed the S&P 500 Index by around 65 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.

Rackspace Hosting Inc. (NYSE:RAX) is a managed cloud company which offers a results-obsessed service known as Fanatical Support to businesses. The company has more than 300,000 customers worldwide, including two-thirds of the companies in the FORTUNE 100. Rackspace Hosting Inc. (NYSE:RAX) posted strong financial results for the second quarter, with its net income jumping to $29.2 million, versus $22.5 million in the same quarter last year. The company reported revenue of $489 million, up from $441.2 million in the second quarter of 2014. Rackspace Hosting Inc. (NYSE:RAX) expects revenue in the third quarter to grow between 2.0% and 3.5%, on a constant currency basis. For the full-year 2015, the company anticipates revenue to grow between 12% and 14%, also on a constant-currency basis.

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