This content is from: Portfolio

The Morning Brief: Icahn Sees Apple Higher, Buyback Larger

Carl Icahn is once again talking up shares of hedge fund favorite Apple. The activist investor reportedly stated in an open letter to Apple chief executive officer Tim Cook that he estimates the stock’s value at $240. This is 86 percent higher than the stock’s closing price on Friday. He is also calling for “a much larger” stock buyback than the company recently announced. How does Icahn get to $240 per share? Icahn figures the company will earn $12 per share in 2016 and then figures it should trade at an 18 price-to-earnings multiple, given its entry into new markets. In late April, Apple announced plans to increase its return to shareholders by more than 50 percent, drawing on $200 billion of cash by the end of March 2017. In the first quarter, Stephen Mandel, Jr.’s Lone Pine Capital more than tripled its stake in Apple, making it the Greenwich, Connecticut hedge fund firm’s eighth-largest holding while Kenneth Griffin’s Chicago-based Citadel boosted its stake by 72 percent, making it the multistrategy firm’s sixth-largest individual stock holding.

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Paul Hudson tells clients his Greenwich, Connecticut-based Glade Brook Capital Partners closed on its new private growth equity fund, GB Private Opportunities Fund, which will invest in the firm’s next four or five private investments. As we earlier reported, the fund already has invested in Uber Technologies and Snapchat. “Going forward all private investments will be made from the new fund or single purpose co-investment vehicles,” said the letter obtained by Alpha. Hudson also told clients its core hedge funds, Glade Brook Global Domestic Fund and Glade Brook Global Offshore Fund, were flat during the first quarter and up 1.6 percent for the year through May 15. Hudson said he sold all of his unrestricted shares of Alibaba Group Holding in the fourth quarter but lost money on his restricted shares, which couldn’t be sold until mid-March. Hudson is a former managing director at Chris Shumway’s Shumway Capital Partners, where he led the firm’s private investment in Facebook in January 2011, before its initial public offering.

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Greenlight Capital cut its stake in Civeo to 5 million shares, or 4.7 percent of the total outstanding. Last year, Oil States International spun off the company, which provides workforce accommodations, logistics and facility management services to the natural resource industry, at the urging of Greenlight and Barry Rosenstein’s Jana Partners. In October, Greenlight disclosed it owned 9.9 percent of the stock and called on the company to replace CEO Bradley Dodson. The New York hedge fund firm also urged the company to aggressively return capital to shareholders “through a well-communicated dividend policy” and add debt “to make its capital structure more appropriate for a real estate company.” Also in October Civeo and Jana announced an agreement that resulted in three new independent directors being added to the board. Last week Civeo confirmed that shareholders approved its move to Canada.

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Kenneth Griffin’s Chicago-based Citadel disclosed it owns nearly 13.9 million shares of Standard Pacific Corp., or 5 percent of the total shares of the homebuilder. This is up from about 10.6 million shares at the end of the first quarter.

Separately, Citadel reported it owns nearly 2.4 million shares, or 5.2 percent of The Finish Line. At the end of the first quarter, it owned roughly 1.1 million shares of the maker of athletic shoes, hedged somewhat with put options.

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