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The Morning Brief: Deutsche Bank Boosts Hedge Fund Favorite Valeant

Deutsche Bank gave another shot in the arm to Valeant Pharmaceuticals International, a big hedge fund favorite and one of the best-performing stocks of the year. The bank raised its price target on the drug giant from $207 to $229, although it kept its Hold recommendation on the stock. The revision was made after the company reported what the bank deemed to be solid second quarter results.

The stock had already surged 56 percent in the first six months of the year alone, boosting many hedge funds. At the end of the first quarter, it was the largest holding of both William Ackman’s Pershing Square Capital Management — Valeant’s third-largest investor — and Jeffrey Ubben’s ValueAct Capital, the fourth-largest shareholder.

Ten Tiger Cubs and other Tiger-related funds also held Valeant at the end of the first quarter, according to New York–based Novus, which, among other things, analyzes the quarterly filings of hedge funds. They include Nehal Chopra’s Tiger Ratan Capital Fund, which counts the stock as its number one holding, accounting for 30 percent of U.S. equity assets. Other large holders included Stephen Mandel Jr.’s Lone Pine Capital and O. Andreas Halvorsen’s Viking Global Investors. The stock closed Friday at $251.92.


David Einhorn’s Greenlight Capital disclosed that it owned more than $133 million worth of stock in UIL Holdings at the end of the first quarter, according to an amended 13F filing. The holding would make the New Haven, Connecticut-based electric and natural gas utility Greenlight’s 17th-largest position in the quarter. The stock closed down 1.30 percent, at $46.24.


RaNA Therapeutics says in a press release that Seth Klarman’s Boston-based Baupost Group participated in a $55 million Series B financing. The company, based in Cambridge, Massachusetts, is trying to develop drugs that target certain proteins.


Eric Mandelblatt’s New York-based Soroban Capital Partners disclosed that it owns more than 14.2 million shares of Time Warner Cable, or 5 percent of the total outstanding. The investment at this point is passive, however. It owned more than 6.1 million shares of the cable giant at the end of the first quarter. The stock close up slightly, at $191.09.


Credit Suisse raised its rating on General Motors from Underperformer to Neutral but maintained its $33 price target after the car giant reported “broadly strong results” in the second quarter, according to a note sent to the bank’s clients. In the first quarter, Einhorn’s Greenlight Capital said it got back into General Motors at $34.62. The firm sold its previous stake in early 2014 after holding it for three years. The Stock closed Friday at $31.06, down 1.40 percent.


Shares of TripAdvisor plunged 13.39 percent Friday, to $80.87, after a number of investment banks cut their price targets on the stock of the online travel company. UBS lowered its target from $90 to $88, while Credit Suisse reduced its target from $91 to $86 and cut its 2015 and 2016 estimates after the company lowered its guidance.

“Despite the setback in the near term, we maintain our Outperform rating,” Credit Suisse told clients in a note. “We are of the belief that the company is only at the initial stages of more fully monetizing the travel demand it has garnered through its differentiated content.”

A generally more bullish Deutsche Bank cut its target from $99 to $93 but maintained its Buy rating, reminding clients it has long warned the company’s guidance was too high. “The guide-down provides an attractive entry point for long-term investors,” it writes in a note. The stock was the fifth largest holding of Ricky Sandler’s Eminence Capital at the end of the first quarter.

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