Gabalex Capital Management is a long/short equity hedge fund based in New York. The firm was founded in 2008 by two former Bear Stearns employees, Nigel Greig and Kenneth Cowin. The fund currently manages about $316 million in assets, and held an equity portfolio valued at more than $285 million as of September 30. Over the third quarter, Gabalex reduced its exposure to three stocks, acquired two new ones, and increased its stake in another two companies. In this article we’ll take a look at some of these moves.
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Wells Fargo & Co (NYSE:WFC)
– Shares Owned by Gabalex Capital (as of September 30): 150,000
– Value of the Holding (as of September 30): $6.64 million
Let’s start with Wells Fargo & Co (NYSE:WFC), in which Gabalex trimmed its holding by 58% over the third quarter, as the stock tumbled by more than 5.7% on the back of a phony accounts scandal that ended up in the payment of a $185 million fine, the firing of more than 5,000 employees, and a large blow to the company’s reputation.
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Shares of Wells Fargo & Co (NYSE:WFC) have, however, managed to rebound in the fourth quarter, gaining more than 2.6%. Even though the stock suffered last week, it returned to the green this week, helped by Berkshire Hathaway’s third-quarter earnings report. The firm run by Warren Buffett hinted last Friday that it had not reduced its stake in the embattled financial company during the third quarter. Berkshire was the largest shareholder of record in the company at the end of the second quarter, with 479.7 million shares, or about $22.7 billion in stock – the value of the holding as of September 30 was disclosed as being worth $22.1 billion, suggesting the stake remained unchanged.
Microsoft Corporation (NASDAQ:MSFT)
– Shares Owned by Gabalex Capital (as of September 30): 200,000
– Value of the Holding (as of September 30): $11.52 million
Another company that Gabalex reduced its stake in during the quarter was Microsoft Corporation (NASDAQ:MSFT), as it sold off 20% of its position. However, given that the shares gained almost 14% between July and September, the move could be seen more as profit taking than as a bearish signal. Also taking profits was Donald Yacktman’s Yacktman Asset Management, which lowered its position by 7% over the third quarter, to 11.65 million shares or about $671.5 million in stock.
Shares of Microsoft Corporation (NASDAQ:MSFT) continued to rise in the fourth quarter, posting returns of almost 5.4%. In a recent letter to investors, the First Eagle Global Value Fund attributed the strength to “continued momentum for its cloud-distributed software business and its Office products, as well as promising signs for its customer relationship management business.” The note went on to point out that “Microsoft’s management has maintained control over operating expenses while at the same time making sizable investments in many areas, such as cloud software, machine learning and artificial intelligence.” Check out further comments from the letter following this link.
We’ll check out three more of the fund’s Q3 moves on the next page.