ValueAct Capital Keeps Portfolio Largely Unchanged, Adds Stake In Cybersecurity Firm

Baker Hughes Incorporated (NYSE:BHI)

– Shares Held By ValueAct Capital (as of December 31): 27.41 Million

– Value of The Holding (as of December 31): $1.78 Billion

After having reduced its stake in Baker Hughes Incorporated (NYSE:BHI) by 23% during the third quarter, ValueAct Capital lowered it by another 8% during the fourth quarter. The fund had initiated its stake in Baker Hughes Incorporated (NYSE:BHI) during the fourth quarter of 2014 and had played a key role in its failed merger with Halliburton Company (NYSE:HAL), for which it also had faced a lawsuit from The U.S. Department of Justice. Though the merger was scrapped by both the companies in May last year due to regulatory hurdles, Baker Hughes’s stock has done extremely well since then by appreciating almost 35%. This rally in the stock along with Baker Hughes not hiking its quarterly dividend has significantly lowered the company’s forward yield, which currently stands at 1.12%. Earlier this month, analysts at Susquehanna upgraded the stock to ‘Positive’ from ‘Neutral’, but kept their price target on it unchanged at $71.

Microsoft Corporation (NASDAQ:MSFT)

– Shares Held By ValueAct Capital (as of December 31): 38.62 Million

– Value of The Holding (as of December 31): $2.4 Billion

As discussed previously Microsoft Corporation (NASDAQ:MSFT), one of the biggest enterprise software companies in the world, continued to remain ValueAct’s largest equity holding at the end of 2016. During the fourth quarter, the fund increased its stake in the company by 1,819 shares, a very small hike considering the size of its position. Microsoft’s stock has rose over 50% since the time its CEO Satya Nadella took charge of the company in February 2014 and changed its trajectory to ‘mobile first, cloud first’. The company has also been hiking its quarterly dividend over the past few years and at $0.39 per share it currently translates to a forward yield of 2.42%, which is among the highest in the large-cap tech space. Analysts who track the company have appreciated the exponential growth of its cloud platform, Azure, among enterprise customers and most of them believe this growth will continue for the next few quarters. Currently, the 37 leading analysts and research firms covering the stock have an average rating of ‘Overweight’ and an average price target of $70 on it, suggesting further upside of 8%.

Disclosure: None