Activist investors are always in the spotlight and their filings with the US Securities and Exchange Commission are always scrutinized, with the stocks that are targeted by activists usually registering significant appreciation. Therefore, in this article, we are going to take a look at the latest moves reported by two notable activist funds: Jeff Smith‘s Starboard Value and Bill Ackman‘s Pershing Square.
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A recent filing with the US Securities and Exchange Commission has revealed that Starboard Value has initiated a massive position in Infoblox Inc (NYSE:BLOX). The investor has acquired 4.10 million shares of the company, which represent 7.10% of its outstanding stock. According to the filing, Starboard has economic exposure to some 4.33 million shares of Infoblox, which represent 7.5% of its outstanding stock due to holding some cash-settled total return swap agreements. Shares of Infoblox have opened around 5% in the green on the back of the news.
Starboard said it currently doesn’t have any proposals regarding the company, although we can expect more news soon. The investor has been building a significant stake in Depomed Inc (NASDAQ:DEPO), which amounts to 5.64 million shares (9.2% of its outstanding stock) and has announced plans to propose candidates to the company’s board of directors. Jeff Smith is scheduled to give a presentation at the 2016 Ira Sohn Conference on May 4 (see more details).
Infoblox Inc (NYSE:BLOX) is a $946 million IT services company that provides Domain Name System (DNS) security, network control and automation. The stock is down by more than 12% since the beginning of the year. At the end of the fourth quarter of 2015, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in Infoblox Inc (NYSE:BLOX), up by 13% from one quarter earlier. Eric Bannasch’s Cadian Capital held the largest stake, which contained 5.06 million shares worth close to $93 million, followed by Dorsal Capital Management, led by Ryan Frick and Oliver Evans, with a $52.4 million position containing 2.85 million shares. Other professional money managers that were bullish consist of Anand Parekh’s Alyeska Investment Group, Jim Simons’s Renaissance Technologies, and Israel Englander’s Millennium Management.
Head on to the next page, where we are going to discuss two moves that have been recently disclosed by Pershing Square.
Billionaire Bill Ackman’s Pershing Square has cut its exposure to Canadian Pacific Railway Ltd (NYSE:CP) according to a recent filing with the US Securities and Exchange Commission. In a Form 4 filing, Pershing Square reported the sale of 4.10 million shares of Canadian Pacific at an average price of $148.25. Following the sale, Pershing Square owns 9.84 million shares of the company, which represent 6.40% of its outstanding stock, as revealed in a 13D filing.
Canadian Pacific Railway Ltd (NYSE:CP)’s stock has lost over 20% in the last 52 weeks, as a drop in commodity prices led to reduced shipping volumes. However, the company recently posted strong results for the first quarter, with adjusted EPS amounting to CAD2.50 per share ($1.97), higher than the estimates of CAD2.40 per share, while its revenue of CAD1.59 billion was down by 4% on the year and below the estimates of CAD1.61 billion. The company recently abandoned plans to pursue the acquisition of Norfolk Southern Corp. (NYSE:NSC) and announced plans to return more capital to shareholders instead. More specifically, Canadian Pacific Railway Ltd (NYSE:CP) has raised its dividend payments by 43% to $0.50 per quarter and said it is going to buy back up to 6.91 million shares of its stock. Pershing Square appears to have cut its position due to the scuttled plans to acquire Norfolk Southern, a move that Mr. Ackman supported. In an investor letter, Pershing Square said the merger would “create significant value” for both companies and “would provide unsurpassed levels of safety and service to its customers and communities while also increasing competition and creating significant shareholder value.”
Aside from Mr. Ackman, who in 2012 managed to replace Canadian Pacific Railway Ltd (NYSE:CP)’s board and top management and succeeded in changing the company’s course, other investors bullish on the stock include Andreas Halvorsen’s Viking Global, Daniel S. Och’s OZ Management, and John Griffin’s Blue Ridge Capital.
In another filing, Pershing Square reiterated its 8.4% stake in Zoetis Inc (NYSE:ZTS), which contains some 41.82 million shares. The investor applauded the company’s progress in simplifying operations, improving cost structure, and better allocating resources. In addition, Pershing said it will not request the re-appointment of its representative William Doyle to Zoetis’ board of directors, with his term set to expire following the 2016 Annual Meeting of stockholders scheduled for May 12.
Pershing Square initiated a stake in the developer of animal vaccines and medicines back in November 2014 and the move sparked rumors that the activist might push Zoetis Inc (NYSE:ZTS) to sell itself to Valeant Pharmaceuticals, which was another new position added to Pershing’s equity portfolio around that time, after Valeant and Pershing had failed to acquire Actavis (now Allergan PLC (NYSE:AGN)). However, the activist chose to change the company’s course rather than urging a transaction. In a letter to investors, Pershing praised Zoetis Inc (NYSE:ZTS)’s management for its commitment to reducing expenses and highlighted two acquisitions made by the company: PHARMAQ, a developer of vaccines for farmed fish, as well as animal health assets from Abbott Animal Health.
Aside from Pershing Square, billionaires Steve Cohen of Point72 Asset Management and George Soros of Soros Fund Management also ranked among Zoetis Inc (NYSE:ZTS)’s shareholders heading into 2016. Point72 reported holding 4.41 million shares of the company, worth $211.54 million, while Soros Fund Management disclosed a $162.28 million-stake containing 3.39 million shares.