Fir Tree’s Big Tobacco Buy And Other Major Moves Heading Into 2017

Page 1 of 3

The last two years have been dismal for Fir Tree, the hedge fund founded by Jeffrey Tannenbaum. Launched in 1994, Fir Tree grew from strength to strength over the next two decades, becoming one of the biggest activist hedge funds on the Street with over $10 billion in assets under management and clients including several reputed endowments and pension funds. However, the year 2015 changed all that. Not only did the fund lose its co-head and Managing Partner Andrew Fredman that year, but it also saw its AUM plunge heavily.

Fir Tree invests in both equities and debt, but it’s better known for its debt-fund operations. This is evident from the fund’s 13F portfolio, which was worth $2.48 billion at the end of December, less than 20% of the $13.87 billion the fund disclosed holding in regulatory AUM as of January 3, 2017. The recent 13F filing of the fund also revealed that it made some major changes to its 13F portfolio during the fourth quarter, with the portfolio experiencing a quarterly turnover rate of 53.23% during that time. Another insight from the filing is that Fir Tree’s 13F portfolio was considerably top-heavy going into 2017, as its top-10 equity holdings amassed over 60% of its portfolio’s value. In this article, we are going to take a look at five major moves made by the fund during the fourth quarter and will discuss the recent performance of these stocks.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 39.7%, topping the 24.1% gain registered by S&P 500 ETFs. Insider Monkey’s enhanced small-cap strategy registered gains of more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points in the last 4.5 years (see the details here).Jeffrey Tannenbaum, Fir Tree


Let’s start with TiVo Corp (NASDAQ:TIVO), in which Fir Tree initiated a stake during the third quarter, which stood as the fund’s eleventh-largest equity holding at the end of that period. While TiVo Corp (NASDAQ:TIVO)’s stock appreciated by almost 25% in the period that Fir Tree initiated its stake, it didn’t move much during the fourth quarter when the fund quickly sold off its entire stake in the company. However, the stock has again rallied significantly and is trading close to its 52-week high right now, owing to the better-than-expected fourth quarter results that the company reported on February 15, along with the announcement that it will start paying dividends and will boost its buyback authorization. Additionally, TiVo also revealed that it’s on track to achieve a cost synergy target of $100 million following its merger with Rovi. After the results were announced, analysts at B. Riley reiterated their ‘Buy’ rating and $31 price target on TiVo’s stock, which suggests upside potential of almost 50%.

Follow Tivo Corp

We’ll check out four other major Q4 moves made by Fir Tree on the following two pages of this article.

Page 1 of 3