Daniel S. Och’s OZ Management disclosed last week that it had reduced its exposure to Rockwood Holdings, Inc. (NYSE:ROC) by 42%. The fund declared ownership of 2.49 million shares, down from 4.31 million shares held in late-July. This position, worth more than $197 million at current stock prices, accounts for 3.5% of the company’s Common Stock, and makes of OZ Management the third largest hedge fund shareholder of record at the $5.66 billion market cap developer, manufacturer and marketer of value-added specialty chemicals and materials.
The fund has been quite active in Rockwood Holdings, Inc. (NYSE:ROC) lately. As we reported recently, the fund had increased its bet on the company massively in mid-July. OZ Management passed from holding 100 shares of the company by the end of the second quarter, to owning 4.31 million shares. This increase coincided with the company’s Agreement and Plan of Merger with Albemarle Corporation (NYSE:ALB). According to this agreement, Albemarle Corporation (NYSE:ALB) will acquire control of the entire equity interest in Rockwood Holdings, Inc. (NYSE:ROC); each outstanding share of Common Stock will be exchanged for $50.65 in cash and 0.4803 of a share of Albemarle Corporation (NYSE:ALB)’s Common Stock.
However, OZ Management assures that “The Shares reported herein were acquired by the Reporting Persons for investment purposes and not with a view towards changing or influencing control of the Issuer. The Reporting Persons no longer own 5% or more of the Common Stock because 1,800,900 shares of Common Stock receivable upon the exercise of call options held by the Reporting Persons expired on the Effective Date” (SEC).
Rockwood Holdings, Inc. (NYSE:ROC)’s stock currently trades at a high premium, at 80 times the company’s earnings. However, it seems worth it, not only because the company boasts industry-leading margins and returns, while paying out a 2.27% dividend yield, but also because its growth prospects look promising. The company has been increasingly focusing its business on lithium and metal surface treatment, an industry in which it carries some advantage due to its low-cost Chilean production facilities –which have lower production costs than those for ore-based producers in China.
The only funds with larger stakes than Oz Management in Rockwood Holdings, Inc. (NYSE:ROC) are Jean-Marie Eveillard’s First Eagle Investment Management, which last disclosed ownership of 3.57 million shares, worth more than $271 million, and Jeffrey Gates’ Gates Capital Management, which reported a 22% increase in its exposure to the company over the second quarter, to 3.06 million shares.
Daniel S. Och’s Och-Ziff Capital Management (or OZ Management) was founded in 1994 and has since amassed an equity portfolio worth more than $33 billion. This makes it one of the largest hedge funds in the world.
OZ Management uses a multi-strategy, multi-geography approach, and has offices in New York, London, Mumbai, Beijing and Hong Kong. Its equity portfolio is quite diversified but has a slight focus on healthcare, consumer discretionary and information technology stocks. Each of these sectors account for approximately 16% of the fund’s total portfolio
Disclosure: Javier Hasse holds no position in any stocks or funds mentioned.