Jonathan Lennon’s Pleasant Lake Partners has recently disclosed a stake in Del Taco Restaurants Inc (NASDAQ:TACO), which amasses 11.5% of the company’s outstanding stock. Del Taco Holdings, a California-based restaurant chain specializes in American and American-style Mexican foods, recently merged with a subsidiary of Levy Acquisition Corp., creating a new company, Del Taco Restaurants Inc (NASDAQ:TACO). According to the filing, Pleasant Lake holds 4.46 million shares of Del Taco Restaurants Inc (NASDAQ:TACO).
New York-based Pleasant Lake Partners is an activist hedge fund co-founded by Jonathan Lennon in 2012. Lennon previously worked as a general stock analyst at John Thaler’s JAT Capital prior to launching his own firm. Lennon employs a concentrated approach to invest in global stocks with a focus on consumer, industrial/natural resources, and media companies. At the end of March, the value of Pleasant Lake’s public equity portfolio stood at $109.6 million. Pleasant Lake’s latest 13F revealed that, during the first quarter, the investor had a strong focus on consumer stocks, which represent over 70% of its equity portfolio. The fund’s top holdings are represented by Famous Dave’s of America Inc. (NASDAQ:DAVE), Hemisphere Media Group Inc (NASDAQ:HMTV), and Houghton Mifflin Harcourt Co (NASDAQ:HMHC).
Recently, Pleasant Lake disclosed upping its position in MagnaChip Semiconductor Corporation (NYSE:MX) to 3.39 million shares. The activist stake accounts for 9.95% of the company’s outstanding common stock. Korea-based MagnaChip Semiconductor Corporation (NYSE:MX) is a designer and manufacturer of analog and mixed-signal semiconductor products for consumer, computing, communication, industrial, automotive and IoT applications.
We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 and these stocks beat the market by 84 percentage points (135% return vs. S&P 500’s 55% gain) over the last 34 months (see the details here).
Levy Acquisition Corp., a blank check company, was formed in 2013 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination. The company completed its initial public offering (IPO) in November 2013, offering of 15 million units, each unit consisting of one share of common stock and one-half of one warrant. Following the completion of merger with Del Taco, Levy Acquisition became Del Taco Restaurants.