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The Morning Brief: ValueAct Increases Rolls-Royce Stake

Jeffrey Ubben’s ValueAct Capital has boosted its stake in Rolls-Royce to 184 million shares, or 10.01 percent of the London-based company that makes engines for airplanes, autos and other vehicles. This is up from his 5.44 percent position we reported at the beginning of August. At the time, the Financial Times reported that a spokesman for the company commented, “We welcome any investor who recognizes the long-term value of our business. We look forward to engaging with ValueAct, just as we do with all investors.” The stock, however, is down 32 percent since early August.

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Shares of hedge fund favorite Ctrip.com International surged more than 15 percent, to $109.69, after rising as much as 20 percent following its reporting of strong quarterly results and an upbeat outlook. It also helped that Stifel Nicolaus raised its price target on the Chinese online travel agency from $105 to $125. “In 2015 Ctrip has single-handedly consolidated the online travel industry,” it states in a research note on Thursday.

O. Andreas Halvorsen’s Viking Global Investors is the company’s fifth-largest shareholder, although it is not a major holding for the Greenwich, Connecticut hedge fund. However, the stock is the fifth-largest holding of Jason Karp’s New York-based Tourbillon Capital Partners and the sixth-largest holding of Josh Resnick’s New York-based Jericho Capital Asset Management.

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Shares of Yahoo! fell more than 1 percent, to $32.62, after New York activist investment firm Starboard Value changed its mind and told the Sunnyvale, California Internet giant to scrap its plan to spin off its stake in Chinese e-commerce company Alibaba Group Holding because it would result in a huge tax bill. Instead the hedge fund firm wants Yahoo to sell its core search and advertising businesses. It then wants the company to return the proceeds from the sale and its current huge cash holdings to shareholders through stock buybacks, a favorite short-term solution among activists. “Yahoo! needs a plan that includes improved focus on businesses where Yahoo! has a competitive advantage, substantial cost reductions, a tax efficient separation of Yahoo! Japan, and aggressive share repurchases funded with excess cash on the balance sheet and capital tied up in intellectual property and real estate assets,” says Starboard managing member Jeffrey Smith, in a letter to Marissa Mayer, president and CEO of Yahoo!

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Shares of activist favorite Qualcomm rose nearly 1 percent to $48.39 — it was up much more than that intraday — even though Stifel Nicolaus cut its price target on the stock from $70 to $59. However, the bank retained its Buy rating on the maker of semiconductor chips for smartphones and other wireless products. Earlier this week South Korea said San Diego-based Qualcomm violated its competition laws. The stock is the largest holding of Barry Rosenstein’s Jana Partners, which is the fifth largest shareholder.

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Larry Robbins’s Glenview Capital Management changed the status of its 7 percent or so stake in The Manitowoc Company to passive from active. The Manitowoc, Wisconsin company makes cranes and foodservice equipment.

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