The Morning Brief: ValueAct Reduced Baker Hughes Stake

Jeffrey Ubben’s ValueAct Capital sold nearly one million shares of Baker Hughes from March 7 through March 22. As a result, it reported the hedge fund firm owns 9 percent of the energy-services company. Interestingly, the previous time ValueAct reported a position in Baker Hughes it said it owned 5.3 percent of the shares at the end of January. There are no other filings since then until Friday’s disclosure. Baker Hughes is still struggling to complete a merger with Halliburton, which has run into antitrust issues. In early April, the Department of Justice accused the San Francisco activist firm of violating certain requirements of the Hart-Scott-Rodino Antitrust Improvements Act stemming from the hedge fund’s earlier purchases of shares of Halliburton and Baker Hughes, which in November 2014 announced plans for a $35 billion merger. In the latest updated regulatory filing, ValueAct repeated earlier assertions that it intends to have conversations with Baker Hughes management and directors to discuss ways to boost the stock’s vales.


Coatue Management disclosed in a regulatory filing that it acquired 5.99 percent of Square, the payment-processing company, on April 12. New York-based Coatue did not own any shares as of year-end, the latest period for which quarter-end holdings have been disclosed. Earlier last week, Daniel Och’s Och-Ziff Capital Management, also based in New York, reported it owns 5.2 percent of Square. At year-end, New York-based Tiger Global Management was the seventh-largest shareholder of thecompany.


Shares of Alphabet, the parent of Google, dropped about 5.4 percent to $737.77 after missing analyst earnings estimates on Thursday. Stifel Nicolaus cut its price target on the stock from $930 to $888 but reiterated its Buy recommendation. In a note to clients, Stifel points out that Alphabet missed revenue growth targets and profitability estimates as the company continues to transition to mobile, programmatic, and video advertising at the same time it boosts its investments in its core and other businesses. “We believe mobile monetization initiatives have a long runway and Alphabet’s video/cloud initiatives may be in the midst of climbing an S-curve of growth,” Stifel said in the report. “Though growth was not as strong as we had expected, we remain positive on the long-term evolution of the platform and its ability to drive user, advertiser, and shareholder value via current investments and initiatives.”

Not everyone interpreted the results the same way. In a note to clients, Barclays asserted that the “miss” was related to a change in accounting treatment of stock options and a lower-than-expected interest-income line. “Overall, we think the quarter was very solid and met and/or slightly exceeded expectations,” Barclays added. “We were a bit surprised with the aftermarket move down more than 5 percent as the core fundamentals were very solid.” It kept its price target at $900 and remained Overweight the stock.