Jeffrey Ubben‘s hedge fund, ValueAct Capital, did not disclose holding shares of Allison Transmission Holdings Inc. (NYSE:ALSN) in its latest 13F filing with the Securities and Exchange Commission. However, recently, Mr. Ubben has submitted a new filing with the SEC disclosing the ownership of 18,025,204 shares of the company. The position achieved represents a 9.9% of the company’s outstanding common stock, placing ValueAct Capital as the hedge fund with the largest position amongst those we track.
The recent disclosure comes just days before the Allison Transmission announced the sale of 15 million shares of its common stock by investment funds affiliated with Onex Corp and The Carlyle Group. The sale is expected to close on November 15th, while Allison Transmission will receive no proceeds, and the sponsors will continue to control a total of 111,892,500 shares, or approximately 61.4 percent of the company in question.
The move by Onex Corp and The Carlyle Group has been dubbed by some analysts as an insider bail out related to lower than expected performance, since Allison Transmission’s stock has underperformed in comparison with the S&P 500. Other analysts interpret the transaction as timely, pointing out that Onex Corp and The Carlyle Group will recover the initial investment and control over 50% of the firm.
In the end, the decision gives Ubben and ValueAct the opportunity to increase its stake in Allison. Most importantly, ValueAct’s recent disclosure is said to be timed to influence the transaction announced by the majority stakeholders. Interestingly, the disclosure had a positive impact on stock price, which rose by almost a dollar, recovering much of the loss registered at the end of October.