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The Biggest Risk Arbitrage Plays Made by Havens Advisors in Q3

Risk arbitrage and bankruptcy-focused hedge fund Havens Advisors LLC recently submitted its latest 13F filing with the SEC, revealing a US public equity portfolio worth $128.37 million at the end of September. The hedge fund was founded in 1995 by one of the first female investment banking veterans on Wall Street, Nancy Havens-Hasty. Prior to founding Havens Advisors, Mrs. Hasty was a risk arbitrage expert at now-defunct investment bank Bear Stearns.

According to Havens Advisors’ latest filing, the fund initiated a stake in nine stocks during the third quarter, increased its holding in 18 stocks, sold its entire stake in 29 stocks and reduced its holding in two stocks. The filing also revealed that while entering the final quarter of 2016, Havens Advisors’ equity portfolio was considerably top-heavy, with its top-10 holdings amassing two-thirds of the value of its equity portfolio. Without further ado, let’s take a look at five of the biggest addition to Havens Advisors’ portfolio during the third quarter.

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

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Joy Global Inc. (NYSE:JOY)

– Shares Owned by Havens Advisors LLC (as of September 30): 87,000

– Value of the Holding (as of September 30): $4.04 Million

Let’s begin with mining equipment manufacturer Joy Global Inc. (NYSE:JOY). Although shares of the Wisconsin-based company had already registered significant gains during the first-half of the year, they shot through the roof in July when Japan’s Komatsu revealed that it will be acquiring the company for $2.9 billion ($3.7 billion including debt). Currently the stock is trading up by 122.76% year-to-date and very close to Komatsu’s purchase price of $28.30 per share. On October 19, analysts at Macquarie downgraded Joy Global Inc. (NYSE:JOY)’s stock to ‘Neutral’ from ‘Outperform’.

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– Shares Owned by Havens Advisors LLC (as of September 30): 116,261

– Value of the Holding (as of September 30): $3.63 Million

Starz (NASDAQ:STRZA) made its debut at the 12th spot in Havens Advisors’ equity portfolio. The recent Presidential election results have been beneficial for the stock of the media and entertainment company, which after many months has started trading in the green for the year. In June, Starz (NASDAQ:STRZA) and Lions Gate Entertainment Corp. (USA) (NYSE:LGF) revealed that the latter had agreed to acquire the former in a cash-and-stock deal valued at $4.4 billion. Earlier this month, Starz announced that it will be joining AT&T Inc. (NYSE:T)’s about-to-be-launched streaming service, DirecTV Now. As part of the deal, all eight Starz and Starz Encore premium channels will be part of the new service when it launches and more will be a part of it at a later date, including the company’s entire video on demand catalogs.

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We’ll check out three more additions to the fund’s portfolio on the next page.

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