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ValueAct Capital’s Top Stock Picks Heading Into Q3

In its most recent 13F filing with the SEC for the reporting period quarter ending June 30, Jeffrey Ubben‘s ValueAct capital revealed an equity portfolio worth nearly $19 billion. Mr. Ubben, who founded ValueAct in 2000 and serves as its CEO and CIO, is well-known on the Street for being an activist and long-term investor. ValueAct runs a concentrated portfolio with only 23 positions, while its top 10 holdings accounted for 86.91% of the equity portfolio at the end of June. In this article we will take a closer look at Valueact’s  largest holdings, which include Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Microsoft Corporation (NASDAQ:MSFT), Halliburton Company (NYSE:HAL), Twenty-First Century Fox Inc (NASDAQ:FOX), and Baker Hughes Incorporated (NYSE:BHI).


Following activist funds like ValueAct is important because it is a very specific and focused strategy in which the investor doesn’t have to wait for catalysts to realize gains in the holding. In recent years, the average returns of activist hedge funds have been much higher than the returns of their passive peers. However, we think that retail investors can also generate market-beating returns by following hedge funds and focusing on their top small-cap picks. Therefore, our strategy, which involves imitating 15 most popular small-cap ideas of hedge funds, has returned 123% since August 2012 and outperformed the S&P 500 ETF (SPY) by more than 65 percentage points (read more details).

Jeffrey Ubben
Jeffrey Ubben
ValueAct Capital

During the second quarter, ValueAct reduced its stake in Valeant Pharmaceuticals Intl Inc (NYSE:VRX), which has been among its top holdings for a long time, by 22% to almost 15 million shares worth $3.33 billion. The fund initiated a stake in the company nine years ago and is among the company’s largest shareholders (Mr. Ubben serves on the company’s board). Meanwhile the stock surged by around 2,200% since ValueAct added it to its portfolio. Since the beginning of 2015, Valeant Pharmaceuticals Intl Inc (NYSE:VRX)’s stock is up almost 75%. The company has recently surpassed Royal Bank of Canada in terms of market capitalization and has become Canada’s most valuable company. On July 27, Morgan Stanley reiterated its ‘Overweight’ rating on the stock and raised its price target to $284 from $235. Another notorious activist investor Bill Ackman of Pershing Square initiated a stake in the company during the first quarter and his fund still owns 19.47 million shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) as of the end of June.

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