Outerwall Inc (OUTR): Engaged Capital Continues to Unload Stake

We wrote recently about Glenn W. Welling‘s Engaged Capital slashing its stake in Outerwall Inc (NASDAQ:OUTR) to 6.1%, after the company inked a merger agreement with Apollo Global Management. The fund has since slashed its stake further, as it counts ownership of just 90,003 common shares, which amass less than 1% of Outerwall’s outstanding stock, according to the activist fund’s latest amended 13D/A filing with the SEC. Given the merger agreement, Engaged Capital’s move to further unwind its stake was somewhat expected, as it takes profit from its position, which was initiated during the fourth quarter of 2015. Shares slumped hard late in that quarter, offering a great entry point for investors, and Engaged Capital heavily added to its stake in the first quarter as shares hit five-year lows.

Outerwall is a retail operator that owns and runs special self-service kiosks for renting video games and movies, as well as coin cashing machines. Year-to-date, the company’s stock is up by 41.84%. For the second quarter of 2016, Outerwall disclosed earnings per share from continuing operations of $2.38 and revenue of $518 million, topping the estimates of $1.37 for EPS and $487 million for revenue. At the end of July, B. Riley reiterated its ‘Buy’ rating on Outerwall’s stock, with a price target of $58, while Dougherty & Co downgraded its rating to ‘Sell’ from ‘Neutral’.

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Outerwall’s investors in our database at the end of the second quarter included Debra Fine’s Fine Capital Partners, with a position valued at $51.25 million, Allan Mecham and Ben Raybould’s Arlington Value Capital, which held $43.66 million worth of shares, and Philippe Laffont’s Coatue Management. Some of the smart money managers who decided to dump Outerwall (NASDAQ:OUTR) during the second quarter, included Paul Marshall and Ian Wace’s Marshall Wace LLP, which sold its position valued at almost $1.5 million on March 31, Mario Gabelli’s GAMCO Investors, which said goodbye to a $344,000 holding, and Benjamin A. Smith’s Laurion Capital Management.

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You can access the original SEC filing by clicking here.

Ownership Summary Table

Name Sole Voting Power Shared Voting Power Sole Dispositive Power Shared Dispositive Power Aggregate Amount Owned Power Percent of Class
Engaged Capital Flagship Master Fund 25,333 25,333 25,333 Less than 1%
Engaged Capital Co-Invest III 61,116 61,116 61,116 Less than 1%
Engaged Capital Flagship Fund 25,333 25,333 25,333 Less than 1%
Engaged Capital Flagship Fund, Ltd 25,333 25,333 25,333 Less than 1%
Engaged Capital 90,003 90,003 90,003 Less than 1%
Engaged Capital Holdings 90,003 90,003 90,003 Less than 1%
Glenn W. Welling 90,003 90,003 90,003 Less than 1%

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Page 1 of 13 – SEC Filing

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
§ 240.13d-2(a)
(Amendment No. 6)1
Outerwall Inc.
(Name of Issuer)
Common Stock, $0.001 par value per share
(Title of Class of Securities)
690070107
(CUSIP Number)
GLENN W. WELLING
ENGAGED CAPITAL, LLC
610 Newport Center Drive, Suite 250
Newport Beach, California 92660
(949) 734-7900
STEVE WOLOSKY
OLSHAN FROME WOLOSKY LLP
1325 Avenue of the Americas
New York, New York 10019
(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)
August 16, 2016
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.
Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See § 240.13d-7 for other parties to whom copies are to be sent.
_______________
1              The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Page 2 of 13 – SEC Filing

1
NAME OF REPORTING PERSON
Engaged Capital Flagship Master Fund, LP
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
4
SOURCE OF FUNDS
WC, OO
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
CAYMAN ISLANDS
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
25,333
8
SHARED VOTING POWER
– 0 –
9
SOLE DISPOSITIVE POWER
25,333
10
SHARED DISPOSITIVE POWER
– 0 –
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
25,333
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
Less than 1%
14
TYPE OF REPORTING PERSON
 
PN

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Page 3 of 13 – SEC Filing

1
NAME OF REPORTING PERSON
Engaged Capital Co-Invest III, L.P.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
4
SOURCE OF FUNDS
WC
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
61,116
8
SHARED VOTING POWER
– 0 –
9
SOLE DISPOSITIVE POWER
61,116
10
SHARED DISPOSITIVE POWER
– 0 –
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
61,116
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
Less than 1%
14
TYPE OF REPORTING PERSON
 
PN

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Page 4 of 13 – SEC Filing

1
NAME OF REPORTING PERSON
Engaged Capital Flagship Fund, LP
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
4
SOURCE OF FUNDS
OO
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
25,333
8
SHARED VOTING POWER
– 0 –
9
SOLE DISPOSITIVE POWER
25,333
10
SHARED DISPOSITIVE POWER
– 0 –
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
25,333
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
Less than 1%
14
TYPE OF REPORTING PERSON
 
PN

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Page 5 of 13 – SEC Filing

1
NAME OF REPORTING PERSON
Engaged Capital Flagship Fund, Ltd.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
4
SOURCE OF FUNDS
OO
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
CAYMAN ISLANDS
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
25,333
8
SHARED VOTING POWER
– 0 –
9
SOLE DISPOSITIVE POWER
25,333
10
SHARED DISPOSITIVE POWER
– 0 –
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
25,333
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
Less than 1%
14
TYPE OF REPORTING PERSON
 
CO

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Page 6 of 13 – SEC Filing

1
NAME OF REPORTING PERSON
Engaged Capital, LLC
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
4
SOURCE OF FUNDS
OO
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
90,003
8
SHARED VOTING POWER
– 0 –
9
SOLE DISPOSITIVE POWER
90,003
10
SHARED DISPOSITIVE POWER
– 0 –
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
90,003
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
Less than 1%
14
TYPE OF REPORTING PERSON
 
OO

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Page 7 of 13 – SEC Filing

1
NAME OF REPORTING PERSON
Engaged Capital Holdings, LLC
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
4
SOURCE OF FUNDS
OO
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
90,003
8
SHARED VOTING POWER
– 0 –
9
SOLE DISPOSITIVE POWER
90,003
10
SHARED DISPOSITIVE POWER
– 0 –
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
90,003
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
Less than 1%
14
TYPE OF REPORTING PERSON
 
OO

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Page 8 of 13 – SEC Filing

1
NAME OF REPORTING PERSON
Glenn W. Welling
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
4
SOURCE OF FUNDS
OO
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
90,003
8
SHARED VOTING POWER
– 0 –
9
SOLE DISPOSITIVE POWER
90,003
10
SHARED DISPOSITIVE POWER
– 0 –
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
90,003
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
Less than 1%
14
TYPE OF REPORTING PERSON
 
IN

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Page 9 of 13 – SEC Filing

The following constitutes Amendment No. 6 to the Schedule 13D filed by the undersigned (“Amendment No. 6”).  This Amendment No. 6 amends the Schedule 13D as specifically set forth herein.
Item 3.
Source and Amount of Funds or Other Consideration.
Item 3 is hereby amended and restated to read as follows:
The Shares owned by each of Engaged Capital Flagship Master and Engaged Capital Co-Invest III and held in an account separately managed by Engaged Capital (the “Engaged Capital Account”) were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases, except as has been previously otherwise noted. The aggregate purchase price of the 25,333 Shares beneficially owned by Engaged Capital Flagship Master is approximately $1,044,752, including brokerage commissions.  The aggregate purchase price of the 61,116 Shares beneficially owned by Engaged Capital Co-Invest III is approximately $1,624,323, including brokerage commissions.  The aggregate purchase price of the 3,554 Shares held in the Engaged Capital Account is approximately $92,431, including brokerage commissions.
Item 5.
Interest in Securities of the Issuer.
Item 5(a) is hereby amended and restated to read as follows:
 (a)           The aggregate percentage of Shares reported owned by each person named herein is based upon 17,215,600 Shares outstanding as of July 22, 2016, which is the total number of Shares outstanding as reported in the Issuer’s quarterly report on Form 10-Q filed with the Securities and Exchange Commission on July 28, 2016.
As of the close of business on August 17, 2016, Engaged Capital Flagship Master beneficially owned 25,333 Shares, constituting less than 1% of the Shares outstanding.  Each of Engaged Capital Fund and Engaged Capital Offshore, as feeder funds of Engaged Capital Flagship Master, may be deemed to beneficially own the 25,333 Shares owned by Engaged Capital Flagship Master, constituting less than 1% of the Shares outstanding.
As of the close of business on August 17, 2016, Engaged Capital Co-Invest III beneficially owned 61,116 Shares, constituting less than 1% of the Shares outstanding.
As of the close of business on August 17, 2016, 3,554 Shares were held in the Engaged Capital Account, constituting less than 1% of the Shares outstanding.
Engaged Capital, as the general partner and investment adviser of Engaged Capital Flagship Master and Engaged Capital Co-Invest III and the investment adviser of the Engaged Capital Account, may be deemed to beneficially own the 90,003 Shares owned in the aggregate by Engaged Capital Flagship Master and Engaged Capital Co-Invest III and held in the Engaged Capital Account, constituting less than 1% of the Shares outstanding.  Engaged Holdings, as the managing member of Engaged Capital, may be deemed to beneficially own the 90,003 Shares owned in the aggregate by Engaged Capital Flagship Master and Engaged Capital Co-Invest III and held in the Engaged Capital Account, constituting less than 1% of the Shares outstanding.  Mr. Welling, as the Founder and CIO of Engaged Capital and sole member of Engaged Holdings, may be deemed to beneficially own the 90,003 Shares owned in the aggregate by Engaged Capital Flagship Master and Engaged Capital Co-Invest III and held in the Engaged Capital Account, constituting less than 1% of the Shares outstanding.

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Page 10 of 13 – SEC Filing

Each Reporting Person, as a member of a “group” with the other Reporting Persons for the purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, may be deemed the beneficial owner of the Shares directly owned by the other Reporting Persons.  Each Reporting Person disclaims beneficial ownership of such Shares except to the extent of his or its pecuniary interest therein.
Item 5(c) is hereby amended and restated to read as follows:
(c)           Schedule A annexed hereto lists all transactions in securities of the Issuer by the Reporting Persons since the filing of Amendment No. 5 to the Schedule 13D.
Item 5(e) is hereby amended and restated to read as follows:
(e)           As of August 16, 2016, the Reporting Persons ceased to be the beneficial owners of more than 5% of the Shares of the Issuer.

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Page 11 of 13 – SEC Filing

SIGNATURES
After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated: August 18, 2016
 
Engaged Capital Flagship Master Fund, LP
   
 
By:
Engaged Capital, LLC
General Partner
   
 
By:
/s/ Glenn W. Welling
   
Name:
Glenn W. Welling
   
Title:
Founder and Chief Investment Officer
 
Engaged Capital Co-Invest III, L.P.
   
 
By:
Engaged Capital, LLC
General Partner
   
 
By:
/s/ Glenn W. Welling
   
Name:
Glenn W. Welling
   
Title:
Founder and Chief Investment Officer
 
Engaged Capital Flagship Fund, LP
   
 
By:
Engaged Capital, LLC
General Partner
   
 
By:
/s/ Glenn W. Welling
   
Name:
Glenn W. Welling
   
Title:
Founder and Chief Investment Officer
 
Engaged Capital Flagship Fund, Ltd.
     
 
By:
/s/ Glenn W. Welling
   
Name:
Glenn W. Welling
   
Title:
Director

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Page 12 of 13 – SEC Filing

 
Engaged Capital, LLC
   
 
By:
/s/ Glenn W. Welling
   
Name:
Glenn W. Welling
   
Title:
Founder and Chief Investment Officer
 
Engaged Capital Holdings, LLC
   
 
By:
/s/ Glenn W. Welling
   
Name:
Glenn W. Welling
   
Title:
Sole Member
 
/s/ Glenn W. Welling
 
Glenn W. Welling

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Page 13 of 13 – SEC Filing

SCHEDULE A
Transactions in Securities of the Issuer Since the Filing of Amendment No. 5 to the Schedule 13D
Nature of the Transaction
Securities
Purchased/(Sold)
Price Per
Share($)
Date of
Purchase / Sale
ENGAGED CAPITAL FLAGSHIP MASTER FUND, LP
Sale of Common Stock
(5,602)
52.2100
08/12/2016
Sale of Common Stock
(22,520)
52.2002
08/12/2016
Sale of Common Stock
(14,650)
52.2138
08/15/2016
Sale of Common Stock
(58,634)
52.2319
08/16/2016
Sale of Common Stock
(9,853)
52.2511
08/16/2016
Sale of Common Stock
(535)
52.1866
08/17/2016
Sale of Common Stock
(104,156)
52.1817
08/17/2016
Sale of Common Stock
(33,157)
52.2312
08/17/2016
Sale of Common Stock
(22,520)
52.1811
08/17/2016
ENGAGED CAPITAL CO-INVEST III, L.P.
Sale of Common Stock
(13,512)
52.2100
08/12/2016
Sale of Common Stock
(54,321)
52.2002
08/12/2016
Sale of Common Stock
(35,337)
52.2138
08/15/2016
Sale of Common Stock
(141,432)
52.2319
08/16/2016
Sale of Common Stock
(23,765)
52.2511
08/16/2016
Sale of Common Stock
(79,979)
52.2312
08/17/2016
Sale of Common Stock
(1,290)
52.1866
08/17/2016
Sale of Common Stock
(251,234)
52.1817
08/17/2016
Sale of Common Stock
(54,321)
52.1811
08/17/2016
ENGAGED CAPITAL, LLC
(Through the Engaged Capital Account)
Sale of Common Stock
(786)
52.2100
08/12/2016
Sale of Common Stock
(3,159)
52.2002
08/12/2016
Sale of Common Stock
(2,055)
52.2138
08/15/2016
Sale of Common Stock
(1,382)
52.2511
08/16/2016
Sale of Common Stock
(8,225)
52.2319
08/16/2016
Sale of Common Stock
(14,610)
52.1817
08/17/2016
Sale of Common Stock
(4,651)
52.2312
08/17/2016
Sale of Common Stock
(3,159)
52.1811
08/17/2016
Sale of Common Stock
(75)
52.1866
08/17/2016

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