40 North Management, the investment firm managed by David S. Winter (pictured) and David J. Millstone, recently filed its 13D with the U.S. Securities and Exchange Commission. The fund disclosed on March 24, a reduction in its exposure to Mattress Firm Holding Corp (NASDAQ:MFRM), since the fourth quarter of 2014. Following the sale of just under 186,700 shares of Common Stock, the firm owns 2.37 million shares of the company, which account for roughly 6.77% of its total shares outstanding, and are worth more than $162.5 million at today opening price of $68.53 per share. Mattress Firm Holding Corp (NASDAQ:MFRM) is a $2.36 billion market-cap specialty retailer of mattresses and related products and accessories in the United States.
David S. Winter and David J. Millstone are the co-CEOs and co-CIOs of 40 North Management, a New York-based privately-held, diversified investment firm that invests across the public and private markets, including in real estate through Winter Properties. The fund disclosed an equity portfolio valued at some $1.87 billion as of the end of 2014, with the fund’s capital being allocated towards the healthcare (32%), finance (28%) and consumer discretionary (15%) sectors.
The latest move in Mattress Firm Holding Corp (NASDAQ:MFRM) by the fund comes amid the company reporting its financial results for the fourth quarter and fiscal year 2014, which ended February 3, 2015. Revenue leaped by 91.3% in the fourth quarter when compared to the same quarter one year prior, to $599.4 million from $313.4 million. Along with this, it reported fiscal fourth-quarter earnings of $6.6 million, or $0.19, which decreased by 23.5% when compared to the same quarter one year ago. For the year, revenue increased by 48.4% to $1.81 billion, compared to $1.22 billion in the prior year period. Also, it reported profit of $44.3 million or $1.27 per share in that time frame.
The Houston-based company showed good revenue growth that exceeded the industry average. Further, compared to its closing price of one year ago, the share price has jumped by more than 33%, exceeding the performance of the market. Moreover, the company’s gross profit margin is considered high, at around 40%.
Following the release of the retailer’s fourth quarter earnings results, shares were climbing in after-hours trading, up 7.37% to $68.75 after the closing bell on March 19. The company’s stock is up about 18% year-to-date. On March 23, it reached the highest level in 2015 at a price of $70.42 per share, which perhaps prompted the recent sale of shares by 40 North.
Among the funds that we track, another shareholder of Mattress Firm Holding Corp (NASDAQ:MFRM) is Sharlyn C. Heslam’s Stockbridge Partners, which held some 2.13 million shares as of the end of 2014, up by 4% on the quarter. The position was valued at $123.9 million, and accounted for 6.56% of the fund’s equity portfolio.
Aside from Mattress Firm Holding Corp (NASDAQ:MFRM), we will also take a look at some other investments of 40 North Management. So let’s take a look at two stocks in which the fund holds large stakes in terms of value. These companies are Columbia Property Trust Inc (NYSE:CXP) and W. R. Grace & Co (NYSE:GRA)
40 North Management disclosed holding 8.1 million shares of Columbia Property Trust Inc (NYSE:CXP) at the end of 2014, up by 103% on the quarter, with the shares having an aggregate value of $206.31 million. Among the funds that we track, Lee Ainslie’s Maverick Capital is the second-biggest shareholder of Columbia Property Trust Inc (NYSE:CXP), holding 1.50 million shares, down by 65% on the quarter, according to its latest 13F filing.
On February 12, the company announced that the board of directors had declared a regular quarterly cash dividend of $0.30 per common share, which will generate an annualized dividend of $1.20 per share. Based on a closing price of $26.58 on Thursday, this makes an annualized dividend yield of 4.5%. Columbia Property Trust Inc (NYSE:CXP) plans to issue its earnings release for the first quarter after the market closes on Thursday, April 30, 2015. Dividends payments are one of the benefits of owning stock in mid-to-large-cap companies. On the other hand however, these stocks are more likely to be priced efficiently, and are less likely to provide the same opportunities for unlocking value that could generate high returns. On the other hand, the best small-cap stocks have a better chance to appreciate significantly, which is has been proven through forward-testing of our small-cap hedge fund strategy, which returned 132% between August 2012 and March 2015, beating the market by 79 percentage points.
In W. R. Grace & Co (NYSE:GRA) the fund disclosed holding 1.01 million shares, up by 125% on the quarter, with the value of the stake amounting to $96.56 million. Among the funds that we track, the largest shareholder of W. R. Grace & Co (NYSE:GRA) was David Cohen and Harold Levy´s Iridian Asset Management, which upped its stake by 15% on the quarter to 5.34 million shares held as of the end of 2014. In a 13G filing in January, the fund revealed that it had increased its position by 25% to 6.74 million shares. Another fund that owned shares of W. R. Grace & Co (NYSE:GRA) was John Griffin‘s Blue Ridge Capital, holding 3.19 million shares, up by 7% on the quarter. The value of the stake amounted to $304.29 million as of the end of 2014.
W.R. Grace & Co. (GRA) produces and sells specialty chemicals and materials worldwide. The chemical maker announced in February its intentions to split its company into two separate, publicly traded companies. One will be focused on the chemicals side of the business and the other on the construction side.
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