Corvex Capital’s Top Holdings and Largest Moves from Last Quarter

Keith Meister founded Corvex Capital, one of the biggest and most famous activist hedge funds, in 2011 after raising a seed capital of $250 million from George Soros. Meister earlier worked with famous activist hedge fund manager Carl Icahn, before venturing out on his own. The fund’s philosophy is to invest in special situations and distressed securities mostly in North America. Meister engages in value‐based investing in situations with identifiable catalysts. He was instrumental in getting Yum! Brands, Inc. (NYSE:YUM) to spin off its Chinese operations, which contributed about half of the fast food company’s sales, arguing that the move would generate more value for shareholders.

Out of 47 positions, Corvex Capital acquired seventeen holdings during the fourth quarter and increased its stake in six other companies. On the other hand, the investor also reduced its stakes in ten companies and closed eight positions. According to its latest 13F filing, the fund had a 13F portfolio valued at $5.79 billion heading into 2017, up from $5.34 billion a quarter earlier. In this article we are going to take a closer look at Corvex’s largest holdings as of the end of December, as well as at some new positions and companies in which the fund closed its stake.

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Yum! Brands, Inc. (NYSE:YUM) was Corvex Capital’s largest holding, which contained 21.04 million shares valued at $1.33 billion at the end of the fourth quarter. On the other hand,  Stephen Mandel‘s Lone Pine Capital closed its stake in Yum! Brands, Inc. (NYSE:YUM), as it sold its entire holding of 6.26 million shares during the fourth quarter. Yum! Brands, Inc. (NYSE:YUM) reported fourth-quarter earnings of $0.79 per share on revenues of $2.02 billion, beating the estimates of $0.74 and $2.09 billion, respectively. The owner of KFC and Taco Bell benefited from strong sales in these restaurants, however, Pizza Hut sales fell by 2% on the year. The company spun off its Chinese subsidiary and the two began trading as separate entities on November 1. As stated earlier, this move was advocated by Meister to focus more on the company’s Asian businesses. Meister has recently stepped down from the company’s Board of Directors. While the number of funds from our database long Yum! Brands, Inc. (NYSE:YUM) remained unchanged at 42, the value of their holdings declined by 43% to $2.3 billion during the fourth quarter.

Keith Meister’s fund sold 4.01 million shares of Signet Jewelers Ltd. (NYSE:SIG) during the fourth quarter, having reduced its holding to 2.91 million shares worth $274 million at the end of December. During the same period, Two Sigma Advisers sold its entire stake, which previously had contained 311,352 shares. Signet Jewelers Ltd. (NYSE:SIG) is a major retailer of jewelry and watches in the U.S., Canada and the UK with a market value of $5.2 billion. It operates around 3,620 stores and kiosks in-malls, strip centers and outlet store locations. Signet Jewelers Ltd. (NYSE:SIG)’s stock has lost almost one-fourth of its value over the last year. The stock price fell at the end of November after the company cut its fourth-quarter earnings guidance to $4-$4.05 per share, compared to the previous estimate of $4 to $4.20. A total of 33 hedge funds tracked by us held shares of Signet Jewelers at the end of December, down from 39 funds a quarter earlier.

Corvex Capital added 7.09 million shares of Bank of America Corp (NYSE:BAC) to its equity portfolio disclosed ownership of 9.46 million shares worth $209 million in its latest 13F. The possible repeal of the Dodd-Frank Act, which has substantially increased the compliance costs for financial companies, has acted as a positive catalyst for the stock earlier this year. With lesser regulations, banks should be able to increase their investment banking profits. The number of hedge funds from our database long Bank of America Corp (NYSE:BAC) jumped to 139 from 112 during the fourth quarter and the value of their holdings surged by 72% to $12.48 billion.

Keith Meister added Netflix, Inc. (NASDAQ:NFLX) to its equity portfolio and held call options underlying  868,100 shares worth $107 million at the end of the fourth quarter. Among the top five buyers of the stock were Andreas Halvorsen‘s Viking Global Investors, D.E. Shaw & Co. and Citadel Advisors. Netflix Inc. (NASDAQ:NFLX) should benefit from the increasing growth of “on-demand” video streaming. The stock is up by 15% year-to-date and has returned more than 62% in the last 12 months. This $61 billion company has a subscriber base of more than 90 million and added 7.05 million new subscribers during the fourth quarter versus 3.57 million customers added during the third quarter. Growth was seen in domestic as well as international markets as the company expanded to 130 new countries over the last year. The company expects foreign subscriber base will grow by 3.7 million in the fourth quarter of 2017, and will exceed the U.S. base by the end of 2017. Shares worth $6.2 billion were held by 61 funds tracked by us at the end December, up from $3.7 billion and 55 funds, respectively, a quarter earlier.

Corvex Capital dumped its entire 1.27 million-share stake in B/E Aerospace Inc. (NASDAQ:BEAV) during the fourth quarter, after having owned shares for just two quarter. On the other hand, John Paulson‘s Paulson & Company bought a new position in B/E Aerospace Inc. (NASDAQ:BEAV), having amassed 1.32 million shares at the end of 2016. B/E Aerospace Inc. (NASDAQ:BEAV) is a leading manufacturer of aircraft cabin interior products for both commercial airliners and business jets, whose shares have gained more than 50% over the last year. In October, Rockwell Collins (NYSE:COL) entered into a definitive agreement to buy B/E Aerospace Inc. (NASDAQ:BEAV) for $8.3 billion in total consideration. The merger is expected to result in cost savings of about $160 million, an expanded network of customers and better aircraft infrastructure. The number of funds from our database bullish on B/E Aerospace Inc. (NASDAQ:BEAV) inched up by two to 35 during the October-December period.

Disclosure: None