A pair of activist hedge fund managers is no doubt muttering “Yuck!” over Yum Brands’ nearly 19 percent stock price plunge Wednesday. Yum Brands, the operator of Taco Bell, KFC and Pizza Hut, reported third quarter results that came in below expectations and warned that business in China is slower than expected, particularly at Pizza Hut Casual Dining. It also cited “stronger foreign exchange headwinds” in its announcement.
Even so, chief executive officer Greg Creed assured investors in a press release, “Our growth fundamentals in China, including new-unit development, remain intact.” Still, he concedes that the second half of the year will be more challenging than the company anticipated. All of this news is enough to give indigestion to Keith Meister’s New York-based Corvex Management, which was the third-largest shareholder at the end of the second quarter. In May Daniel Loeb’s New York-based Third Point disclosed that Yum was one among several new holdings taken in the first quarter. It then boosted this stake by 8 percent in the second quarter, making the fast-food conglomerate its seventh-largest holding. The stock is also a significant holding of New York-based Senator Investment Group.
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Viking Global Investors was one of a number of investors to participate in the $108 million Series D financing for Impossible Foods, which offers animal-free meat and dairy foods. Remember, at the beginning of the year, Greenwich, Connecticut-based Viking launched Viking Global Opportunities, a hybrid fund designed to accommodate illiquid securities. In its second-quarter letter, Viking said the portfolio held seven unlisted companies at the time.
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Call this a high-stakes buzzer beater. Citadel’s Kenneth Griffin and his wife, Anne Dias Griffin, agreed to a settlement over their sometimes cringe-worthy, highly public divorce shortly before Dias was scheduled to testify publicly, according to the Wall Street Journal. No details were disclosed. However, the Journal did note that Dias agreed to their original prenuptial arrangement, which she had been contesting and which had already paid her millions of dollars. She also decided not to move their three children to New York. The paper also notes that Dias will receive child support that exceeds the norm in Illinois, although the settlement does not specify an amount.
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Dyal Capital Partners has made another hedge fund investment. The Neuberger Berman unit said it has bought a passive, minority interest in Chenavari Investment Managers, which focuses on credit, structured finance, real estate and private debt strategies. It had $5.4 billion of assets under management as of September 1. According to the announcement, Chenavari will continue to be led by chief executive officer and co-chief investment officer Loic Fery and co-CIO Frederic Couderc, who will retain complete control over the firm’s operations and investment process.
“The vast majority of Chenavari’s economic interests remain in the hands of Chenavari’s existing shareholders,” the announcement states.
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More bad news for Jeffrey Ubben’s ValueAct Capital. While the San Francisco-based firm has been suffering big losses of late from its long-time investment in Valeant Pharmaceuticals International, on Wednesday it also had to contend with the steep decline in the shares of Adobe Systems after the software company offered disappointing earnings guidance. The stock dropped 5.3 percent to close at $80.65.
It did not help that Credit Suisse Wednesday morning lowered its estimates and cut its target price from $75 to $65. It also maintained its neutral rating on the stock, noting that Adobe’s current valuation “already captures much of the positive impact” from the conversion of what it describes as its “core” user base to its new Creative Cloud collection of software. At the end of the second quarter, Adobe was ValueAct’s sixth largest holding in a portfolio of 14 stocks.
