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Rockwell Collins, Inc. (COL): ValueAct Capital Picks Profits from Long-Term Investment

Jeffrey Ubben‘s ValueAct Partners has reduced its position in Rockwell Collins, Inc. (NYSE:COL), as a new filing with the Securities and Exchange Commission revealed. ValueAct sold around 3.39 million shares, reducing its stake to some 7.80 million shares. The stake is activist by nature and amasses 5.8% of the company’s common stock, down from 8.3% held previously.


Jeff Ubben has decreased his fund’s stake in Rockwell Collins, Inc. (NYSE:COL) back in September. The fund reduced the stake to 11.19 million shares from 12.01 million held at the end of June. In fact, the fund has been active over the last couple of months. Also in September, ValueAct raised its activist stake in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) reporting ownership of 18.93 million shares, equal to 5.6% of the company. Moreover, Mr. Ubben has been appointed to Valeant’s board recently. The investor is also bullish on Allison Transmission Holdings Inc (NYSE:ALSN) and at the beginning of October, ValueAct purchased 550,000 shares of the company, bringing its position to 10.5% of the common stock and later acquired 275,000 shares, further raising its stake, which now amasses 18.85 million shares. In addition, a couple of weeks ago, ValueAct added Agrium Inc. (USA) (NYSE:AGU) to its equity portfolio and disclosed a 5.7% activist stake with 8.19 million shares, and, earlier this week, the fund sold some 262,700 class A shares of CBRE Group Inc (NYSE:CBG)reducing its holding to 31.9 million shares.

Overall, ValueAct holds a concentrated equity position with less than 15 positions, which has a value of some $13.5 million. The fund owns a huge stake in Microsoft Corporation (NASDAQ:MSFT), which amasses 74.2 million shares as of the end of June and has representatives on the company’s board of directors. Mr. Ubben is a notorious activist investor with ValueAct posting impressive returns. The fund had annualized returns of around 17% since its launch back in 2000.

In Rockwell Collins, Inc. (NYSE:COL), ValueAct initiated a stake during the second quarter of 2011, the position containing around 2.08 million shares. Later that same year, the investor raised its exposure to the company and disclosed an activist stake that contained 10.11 million shares, representing 6.6% of the company. However, despite going activist, ValueAct did not reveal any particular moves regarding the company. The stock of Rockwell climbed around 80% since ValueAct boosted its position in August, 2011. Moreover, the company has been paying a constant dividend of $0.30 per quarter.

The latest sales took place amid the company reporting its financial results, which sent the stock higher. Rockwell Collins, Inc. (NYSE:COL) posted sales of $1.40 billion for the fourth quarter of fiscal 2014, up by 15% on the year, while for the full fiscal year, the sales went up by 11% on the year to $4.98 billion. The EPS of the company inched down to $1.27 for the fourth quarter and to $4.52 for the full year, from $1.28 and $4.56 respectively. However, both the sales and EPS came above the consensus estimate both in quarterly and annual terms.

Farallon Capital, founded by Thomas Steyer, and David E. Shaw‘s D.E. Shaw are two other funds that own shares of Rockwell Collins, Inc. (NYSE:COL). Farallon upped its stake by 37% during the second quarter to 1.31 million shares, while D.E. Shaw slightly cut its position to 1.24 million shares. Moreover, Kenneth Squire‘s 13D Management, which follows the activity of activist investors as a part of its strategy, increased its stake by more than 30% during the April-June period to 102,300 shares.

In this way, since ValueAct’s average holding for a stock is around 3 years, it is possible that Mr. Ubben has been cutting his fund’s position in Rockwell Collins, Inc. (NYSE:COL) recently in order to pick up some profits. The holding represents a good example of how tracking the activity of hedge funds can help retail investors to make some money, since hedge funds usually commit a lot of resources and time before investing, and since hedge funds invest for longer periods, smaller investors can still get some actions by regularly tracking these moves.

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