According to an amended 13D filing activist investor Dan Loeb‘s Third Point now owns about 53.85 million shares of Baxter International Inc (NYSE:BAX), which marks an increase of 1.35 million shares from the holding that the firm disclosed in early August. The new stake represents about 9.9% of the company’s outstanding common stock. More importantly, the filing revealed that Third Point has reached an agreement with Baxter’s management, which involves the appointment of Munib Islam, a Partner at Third Point, to the company’s Board of Directors and another, mutually agreed upon, Director will also be appointed in the near future. The move has resulted in the expansion of Baxter’s Board from 10 to 12 members. Additionally, the agreement included standstill and voting provisions, and a commitment to declassify Baxter’s Board of Directors.
We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 118%, nearly 2 times greater returns than the S&P 500 during the same period (see more details).
Baxter International Inc (NYSE:BAX) spun off Baxalta Inc (NYSE:BXLT), a $21.08 billion developer of biotech treatments for rare blood conditions, cancers and immune system disorders, in mid June. Islam believes that Baxter now has the opportunity to focus on improving margins and increasing market share for the rest of its healthcare business, which is dominated by medical devices.
As far as the standstill agreement is concerned, Third Point cannot solicit proxies or acquire more than 13% of Baxter’s outstanding shares. The time period is till 45 days prior to the company’s advance notice deadline for making director nominations at the 2017 Annual Meeting, or 20 days after Mr. Islam is no longer the member of the Board. Currently, Mr. Islam has been appointed to the Audit Committee of the Board and also the Issuer’s Chief Executive Officer Search Working Group.