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The Morning Brief: July Is a Mixed Bag for Activists

Richard (Mick) McGuire III’s Marcato International, managed by San Francisco-based Marcato Capital Management, lost 3.6 percent in July, knocking its gain for the year to about 1 percent in what is shaping up as a mixed month for activists. Nelson Peltz’s New York-based Trian Partners, managed by Trian Fund Management, lost 2.32 percent last month and is now up just 1.44 percent for the year. We’ve already reported that Barry Rosenstein’s New York-based Jana Partners, managed by the firm of the same name, lost 0.3 percent last month, the fund’s fourth decline in the past five months, and is now up just 1.3 percent for the year.

On the other hand, William Ackman’s New York-based Pershing Square International, managed by New York-based Pershing Square Capital Management, surged 5.6 percent in July and is now up more than 9 percent for the year, while Daniel Loeb’s New York-based Third Point, managed by the firm of the same name, rose 0.8 percent in July. As a result, the sometimes activist fund firm is up 5.7 percent for the year.Jeffrey Altman’s Owl Creek Overseas Fund, which lost 8 percent last year, is back in the red. The New York multistrategy hedge fund lost 2.8 percent in July and is now down 2 percent for the year. It is managed by Owl Creek Capital Management.Danny Yong’s Dymon Asia Macro Fund, managed by Dymon Asia Capital, headquartered in Singapore, lost about 1.5 percent last month and is now down 8.4 percent for the year.

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Ackman’s Pershing Square disclosed Thursday it owns about 7.5 percent of snack food giant Mondelez International. In a regulatory filing, Pershing Square says it finds the stock undervalued and plans to engage in discussions with the company’s management and board of directors, other shareholders and others related to the business, operations,including cost structures, capitalization, financial condition, management, governance and board composition and strategic plans. “We welcome Pershing Square as investors in our company,” a Mondelez spokeswoman told WSJ.com, which first reported the investment before it was publicly disclosed. “We’ll continue to focus on executing our strategy and on delivering value for all our shareholders.” Remember, Trian’s Nelson Peltz is one of Mondelez’s largest shareholders and sits on the board. He has been pushing Mondelez to merge with PepsiCo’s snack business, assuming the soft-drink giant agrees. We reported earlier this month that at least two investment banks raised their target price on Mondelez after the company reported strong second-quarter earnings and revenues and announced a new $6 billion stock buyback. Mondelez was formed in October 2012 when Kraft Foods spun off its North American grocery business, and gave it the Kraft Foods name. Simultaneously, Kraft renamed its faster-growing snack-foods business Mondelez International. Earlier this year Kraft agreed to merge with H.J. Heinz. Mondelez stock climbed about 1.1 percent Thursday on the news.

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More woes for David Einhorn’s Greenlight Capital. Shares of Sun Edison Thursday plummeted more than 25 percent to $17.08 when the solar panel developer reported a much larger than expected quarterly loss which also came in below estimates. The stock is now trading at a six-month low. The stock, long among the New York hedge fund manager’s largest holdings, plunged 19 percent last month. Earlier this week, we reported that Deutsche Bank cut its rating on Consol Energy, another major Greenlight holding, from Hold to Sell and slashed its price target from $27 to $14, citing “potential downside on weakening commodity prices” such as coal and natural gas and a “stressed balance sheet amid low operating cash flows.” Shares of Consol plunged 24 percent in July and were down more than 52 percent for the year through the end of July. They fell nearly 16 percent in the first three days of August before rebounding about 2.8 percent on Thursday.

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Deutsche Bank raised its price target on hedge fund favorite Priceline.com, from $1,307 to $1,450 a share just days after trimming the price target. However, it retained its Hold recommendation. “Priceline reported strong results across the board, with accelerating bookings growth,” it pointed out in a note to clients. As for the stock, it saw “modest upside.” At the end of the second quarter, the stock was the largest position of Stephen Mandel Jr.’s Greenwich, Connecticut-based Lone Pine Capital. At the end of the first quarter, at least 10 funds with some sort of connection to Julian Robertson, Jr.’s New York-based Tiger Management had a position in the stock. It was also the third-largest position of David Tepper’s Short Hills, New Jersey-based Appaloosa Management.

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Robert Citrone’s Discovery Capital Management cut its stake in Universal Display to 4 million shares from 6.9 million shares at the end of the first quarter, reducing its position in the developer of organic light-emitting device technology to 8.7 percent.

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