The battle between Walt Disney Co. and Comcast Corp. to buy assets from 21st Century Fox and Sky has been lucrative for Fox investors. And one of them is ValueAct Capital.
The San Francisco-based hedge fund firm is one of the top-performing activists this year thanks in part to the surge in Fox’s shares since the bidding war for some of its assets began last month. ValueAct surged 7.8 percent in the second quarter, boosting its gain for the first half of the year to 9.8 percent, according to an investor.
This makes it one of the better-performing hedge funds generally, and a top performer among those that don't rely on the widely-held stocks including FANG companies, or Facebook, Amazon, Netflix, and Google's parent Alphabet.
ValueAct declined to comment.
Fox is by far the firm's largest U.S. holding, with more than 53 million shares. It accounted for about 19.5 percent of the firm’s nearly $10 billion U.S. stock portfolio at the end of the first quarter, according to its most recent 13F filing. And in the second quarter alone, the stock surged 37 percent.
ValueAct made its initial investment in Fox in the second quarter of 2014. In mid-May 2015, the hedge fund disclosed that it owned 5.5 percent of the company's shares, or a total 43.5 million at the time. Jeffrey Ubben, co-founder and chief executive officer of ValueAct, joined Fox's board of directors in November 2015. In April, he stepped down.
The firm's gains in the second quarter were also driven by positions in New York-based alternative asset manager KKR & Co. and Rolls-Royce, a London-based company that makes engines for airplanes, autos and other vehicles. While ValueAct's holding of KKR is publicly disclosed in the 13F filing, the firm's investment in Rolls-Royce is not since the stock is not traded on a U.S. exchange, according to an investor.
In the second quarter, KKR, the hedge fund firm’s fifth largest U.S. long, was up more than 23 percent. The stock has benefited in part from its May decision to convert to a corporation, from a partnership, due to changes in the tax law. Shares of Rolls-Royce, meanwhile, were up more than 13 percent in the second quarter.
ValueAct manages about $15 billion of assets, returning about $3 billion to investors over the past two years, according to an investor.
At the end of the first quarter, the firm held 12 U.S. traded positions, the 13F filing shows. This is more or less the typical number of individual positions in its portfolio. Rounding out its top five U.S. longs at the end of the first quarter were data storage giant Seagate Technology, Alliance Data Systems, a provider of private label credit cards, and banking giant Citigroup.
ValueAct made Citigroup a major holding in the first quarter when it bought 15.1 million shares, bringing its total position to 16.2 million shares,
Valeant Pharmaceuticals International, the controversial drug company that was once ValueAct’s largest position, now ranks its tenth largest overall, according to the regulatory filing. It bought another 1,510 shares in the first quarter. In the second quarter, the stock surged 46 percent.
In the first quarter, ValueAct also liquidated two positions, its high-profile stake in software and cloud computing giant Microsoft Corp. and pharmacy benefit manager Express Scripts Holding Co.
