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.

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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’.

Starz (NASDAQ:STRZA)

– 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.

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

Intersil Corp (NASDAQ:ISIL)

– Shares Owned by Havens Advisors LLC (as of September 30): 175,000

– Value of the Holding (as of September 30): $3.84 Million

Intersil Corp (NASDAQ:ISIL)’s stock rose by over 60% during the third quarter, when Havens Advisors LLC initiated its stake in the company. The rally started in August amid news that Japan’s Renesas Electronics was in talks to acquire the company and was strengthened when Intersil Corp (NASDAQ:ISIL) formally announced that Renesas would be acquiring it for $22.50 per share or around $3.2 billion. Since the start of the fourth quarter, Intersil’s stock has been trading around the $22 level and is up by 73% year-to-date. For its fiscal 2016 third quarter, the company reported EPS of $0.22 on revenue of $139.05 million beating analysts’ expectations of EPS of $0.18 on revenue of $137.60 million.

Sunedison Semiconductor Ltd (NASDAQ:SEMI)

– Shares Owned by Havens Advisors LLC (as of September 30): 340,000

– Value of the Holding (as of September 30): $3.87 Million

Sunedison Semiconductor Ltd (NASDAQ:SEMI) was another company that agreed to be acquired during the third quarter in which Havens Advisors initiated a stake. On August 18, GlobalWafers announced that it will be acquiring the Missouri-based silicon wafers manufacturer for $12 per share or $683 million. Prior to that announcement, shares of Sunedison Semiconductor Ltd (NASDAQ:SEMI) were extremely volatile this year. However, they have stabilized since then and are currently trading up by 52.3% year-to-date. After GlobalWafers announced the acquisition, several analysts downgraded Sunedison Semiconductor’s stock, including those at Deutsche Bank AG and Summit Redstone, who lowered their rating on it to ‘Hold’ from ‘Buy’.

WhiteWave Foods Co (NYSE:WWAV)

– Shares Owned by Havens Advisors LLC (as of September 30): 132,000

– Value of the Holding (as of September 30): $7.18 Million

Finally, WhiteWave Foods Co (NYSE:WWAV) was the largest new addition to Havens Advisors’ equity portfolio during the third quarter. Like all the other companies we have discussed, WhiteWave Foods Co (NYSE:WWAV) is also set to be acquired by another company in the next few months. In July, French company Danone, which is the largest yogurt maker in the world, revealed that it will be acquiring WhiteWave for $12.5 billion.  Although, WhiteWave’s stock has appreciated by 38.83% so far this year, it is still trading 4.5% lower than the $56.25 per share purchase price offered by Danone. On November 9, the company reported mixed numbers for its third quarter. While analysts had expected it to report EPS of $0.38 on revenue of $1.1 billion, WhiteWave declared EPS of $0.39 on revenue of $1.05 billion.

Disclosure: None