Call this another case of buying on the rumor and selling on the news. A large number of hedge fund firms are celebrating the $160 billion merger agreement between Pfizer and Allergan, even though shares of Allergan were down 3.44 percent on Monday, to $301.72. Even so, the stock is still up about 12 percent since the end of September alone. According to Goldman Sachs, 74 hedge funds included the drug maker among their top ten holdings at the end of the third quarter, more than any other stock. In fact, it was the only stock among the top seven of this ranking that was not among the so-called TMT group of telecommunications, technology, media and Internet stocks.
At the end of the third quarter, the largest hedge fund holders were Greenwich, Connecticut-based Tiger Cub Viking Global Investors — the hedge fund firm’s largest holding — and New York-based Paulson & Co. It was also the largest holding of George Soros’ New York-based family office, Soros Fund Management, and two Tiger Cubs: Robert Citrone’s Norwalk, Connecticut-based Discovery Capital Management and New York-based Hoplite Capital Management, founded by former Tiger Management analyst John Lykouretzos.
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Shares of New York-based aluminum maker Alcoa jumped 4.4 percent, to $9.07, after Paul Singer’s Elliott Management disclosed it owned 6.4 percent of the company. In a regulatory filing, the New York multistrategy firm, which often engages in activism, called the shares “undervalued” and supported Alcoa’s recent decision to spin off its manufacturing unit, noting it will “create value substantially above the current share price.” Even so, Elliott adds it wants to speak with the board of directors and management about the transaction as well as other “available opportunities to maximize shareholder value.”
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Barry Rosenstein’s Jana Partners sold nearly 900,000 shares of Computer Sciences, cutting its stake in the Falls Church, Virginia technology services company to 4.1 percent. In a regulatory filing, the activist investor said it is “highly supportive of the recent steps” taken by the company’s board and management, including its recent decision to spin off its global commercial business from its U.S. public sector unit. At the end of the third quarter, Computer Sciences was Jana’s sixth largest holding.
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Deutsche Bank raised its rating on Willis Group from sell to hold three weeks after it downgraded the stock to sell. It also lifted its price target from $41 to $47. “While we regret multiple rating changes over a short period, the related catalyst has played through,” it tells clients. In English, this means that back in June, London-based Willis agreed to merge with New York-based Towers Watson. TW shareholders rejected the initial deal in the face of opposition to the merger from the major proxy advisory firms. So, the two companies late last week announced they sweetened the value of the deal, which Deutsche Bank apparently approves of. “We believe that the deal will likely pass,” it tells clients.
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Daniel Och’s New York-based Och-Ziff Capital Management disclosed that it owned more than 25.7 million shares of 21 Vianet Group, or 5.6 percent of the Chinese data management company. It did not own any shares at the end of the third quarter.
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Greenwich, Connecticut-based Lone Pine Capital boosted its stake in Dollar Tree by more than 150 percent, to nearly 13.2 million shares. This works out to 5.6 percent of the Chesapeake, Virginia-based discount retailer.
