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Morning Brief: Hedge Funds Applaud Apple’s Big News

The tech giant’s stock rose on news that the company plans to make investments and create jobs in a move it says will contribute more than $350 billion to the economy.

  • By Stephen Taub

Shares of hedge fund favorite Apple jumped about 1.65 percent, to close at a new historical high of $179.10, after the consumer technology company said it will invest more than $30 billion in capital expenditures over the next five years and create over 20,000 new jobs. It also plans to open a new campus in a new location, which will initially house technical support. Apple said it plans to announce the location of the new facility later in the year. More than $10 billion of the additional capital expenditures will be investments in data centers across the US. Apple also said it is currently breaking ground on a new facility in downtown Reno, which will support its existing Nevada facilities.

“Apple’s direct contribution to the U.S. economy will be more than $350 billion over the next five years, not including Apple’s ongoing tax payments, the tax revenues generated from employees’ wages and the sale of Apple products,” Apple states in its press release. Apple also said it expects to make repatriation tax payments of about $38 billion related to the new tax law, which it estimates will be the largest ever made. At the end of the third quarter, Apple was the fifth-most widely held stock among hedge funds, with at least 219 firms reporting a position, according to Novus. However, this was 50 fewer funds than in the previous quarter, according to the data analytics firm.

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Activist hedge fund firm Starboard Value and comScore reached an agreement on a new financing arrangement. Under the deal, the audience measurement company will issue $150 million in convertible notes to Starboard in exchange for $85 million in cash and $65 million of comScore stock. Starboard also has an option to acquire another $50 million in convertible notes. Starboard also received warrants that would allow it to purchase 250,000 shares of stock.

“These financing arrangements provide the company with financial and strategic flexibility, while also providing shareholders the opportunity to participate in the future financing, and are in the best interests of the company and its shareholders,” comScore states in a press release.

In September 2016 comScore announced it would restate its financials going back three years after its audit committee identified revenue recognition errors.

In Wednesday’s announcement, the company said it expects to complete the audit of its financial statements for 2015, 2016, and 2017 by the end of the first quarter. At the end of the third quarter of 2017, comScore was Starboard’s fifteenth-largest position after the firm sliced its stake by nearly one-third, according to its quarterly regulatory filing detailing U.S. long stock positions.

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Valiant Capital Management filed revisions of its 13F disclosures for each of the first three quarters of 2017 showing that it held shares of Yatra Online, the Indian online travel agency. The stake, not previously disclosed, was reduced from about 4.2 million shares as of March 31, 2017 to 3.4 million shares in the June quarter and to nearly 1.4 million as of September 30.

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