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The Morning Brief: Blackstone Fund Takes Stake in Marathon
An investment vehicle of Blackstone Alternative Asset Management has bought a passive, minority interest in Marathon Asset Management, a New York hedge fund firm founded by Bruce Richards and Louis Hanover. Marathon, which has $12.75 billion in assets under management, specializes in credit strategies, including global corporate credit, distressed and special situation credit, structured credit, emerging market and leveraged loans. Terms of the deal were not disclosed, including the size of Blackstone’s stake. This is the fourth investment made by Blackstone Strategic Capital Holdings Fund since 2014. The others are Evanton, Illinois-based Magnetar Capital, New York-based Solus Alternative Asset Management and New York’s Senator Investment Group.
Marathon also announced that partner and chief operating officer Andrew Rabinowitz has been promoted to president and chief operating officer. “This transaction allows Marathon to maintain its autonomy while building upon its successes to date by focusing our attention on our clients, partners and employees,” Rabinowitz said in a press release.
The firm also disclosed that earlier this year, Vijay Srinivasan, senior managing director, assumed responsibility for overseeing global credit research. He replaced Richard Ronzetti, who announced his retirement.
Barclays raised its rating on hedge fund favorite The Priceline Group to Overweight and lifted its price target on the shares from $1,300 to $1,500. Barclays pointed out that the stock is pricing in “a fairly bearish scenario,” compounded by the company’s recent bearish guidance for the second quarter. However, the investment bank said the lower expectations provided by the company “were mostly timing-related” and do not affect its long-term thesis. At the end of the first quarter, 100 hedge funds had positions in the online travel company, including 26 that count the stock among their top-ten holdings, according to Goldman Sachs. This includes 13 firms with roots to Julian Robertson, Jr.’s Tiger Management, according to New York-based Novus. For example, the stock is the fourth largest U.S.-based long position of Greenwich, Connecticut-based Lone Pine Capital, Priceline’s tenth largest shareholder. It is also the third largest U.S. long of New York-based Tiger Global Management and the fourth largest long of Chicago-based Citadel. The stock Wednesday closed at $1,360.10, up 1.27 percent.
Barclays also raised its price target on TransDigm Group, a favorite among the Tiger crowd, from $285 to $300 in anticipation of Thursday’s biannual analyst day. The company is a maker of commercial and military aerospace components. The company has made about $2 billion in acquisitions in the past two years. “We think the focus of investors both this week and further out will be on CEO succession and incremental capital deployment, both of which could be important drivers of relative performance in the coming quarters,” Barclays told clients. At the end of the first quarter, 19 hedge fund firms included the stock among their top-ten holdings while ten of 49 Tiger-related hedge fund firms held positions in the stock. Lone Pine Capital is the third largest shareholder. Other major shareholders include Greenwich, Connecticut-based Viking Global Investors and New York-based Blue Ridge Capital, which lists the stock as its ninth largest U.S. long. The stock closed down slightly, at $261.86.
Shares of hedge fund favorite Adobe plunged 5.7 percent after the software maker reported fiscal second-quarter revenue that was below analysts’ expectations. Earnings, however, beat forecasts. In a note to clients, Credit Suisse told clients that Adobe’s story “remains intact and the company continues to have several multiyear growth initiatives ahead of it.” However, it conceded that the stock currently has a valuation premium, which already reflects Adobe’s “positive momentum and is pricing in most of the potential good news.” At the end of the first quarter, 83 hedge fund firms held positions in the stock, according to Goldman Sachs.
Shares of Canadian Pacific rebounded by 2.6 percent on Wednesday even though Credit Suisse trimmed its price target from $163 to $160 based on its discounted cash flow model. It also maintained its Outperform rating. The stock, the largest long position of New York-based Pershing Square Capital Management, had fallen nearly 2 percent on Tuesday after the Calgary-based company warned that second quarter revenue could decline by 12 percent. Pershing Square is now down 2.9 percent for the month through June 21 and off 20.9 percent for the year-to-date.
The two founding partners of London-based Marshall Wace are split over Brexit, the movement advocating that the United Kingdom leave the European Union; the referendum will be held today. They each gave $147,000 to opposing sides: Leave and Remain. According to Bloomberg, Marshall donated money to Vote Leave while Wace contributed to The In Campaign, which is lobbying to remain. According to the report, Winton Capital Management founder David Harding earlier gave more than $5.1 million to Britain Stronger in Europe, which advocates remaining in the EU.