>>> Jana Partners (Barry Rosenstein) discloses updated portfolio positions in 13

Jana Partners (Barry Rosenstein) discloses updated portfolio positions in 13F filing: Affirms new BMY stake, increases HDS / YHOO/ NUVA / UHS positions, closes out GPK / HPE positions
Highlights from 2016 Q4 filing as compared to 2016 Q3 filing:
  • New positions in: BMY (~3.87 mln shares - as previously disclosed), CRM (~3.17 mln), LW (~1.86 mln - also has calls),CTSH (~1.44 mln), ZAYO (~1.03 mln), AET (~0.89 mln - also has calls), PRXL (~0.75 mln), FCE.A (~0.71 mln)
  • Increased positions in: HDS (to ~14.5 mln shares from ~8.33 mln shares), YHOO (to ~2 mln from ~0.2 mln), NUVA (to ~1.81 mln from ~0.08 mln), UHS (to ~2.05 mln from ~1.27 mln), SEM (to ~2.27 mln from ~1.9 mln) VVV (to ~1.32 mln from ~1.05 mln), ACAD (to ~0.3 mln from ~0.15 mln) DERM (to ~0.24 mln from ~0.15 mln), SAGE (to ~0.2 mln from ~0.11 mln),
  • Maintained positions in: CAG (~17.79 mln shares)
  • Closed positions in: GPK (from ~10.28 mln shares), HPE (from ~6.82 mln), TMH (from ~5.89 mln), JCI (from ~5.6 mln), CCE(from ~5.15 mln), CSRA (from ~4.83 mln), MDLZ (from ~3.31 mln), VIAB (from ~2.76 mln), KATE (from ~1.07 mln), PTHN(from ~0.24 mln)
  • Decreased positions in: DVMT (to ~0.75 mln shares from ~3.02 mln shares), CSC (to ~3.3 mln from ~4.71 mln), HRS (to ~1.1 mln from ~2.42 mln), LBRDK (to ~5.54 mln from ~6.35 mln), WLTW (to ~1.54 mln from ~2.11 mln)

>>> Maverick Capital discloses updated portfolio positions in 13F filing: New FL

Maverick Capital discloses updated portfolio positions in 13F filing: New FLT CNC MLM RF SC positions
Highlights from 2016 Q4 filing as compared to 2016 Q3 filing:
  • New positions in: FLT (~1.74 mln shares), CNC (~1.4 mln), MLM (~0.45 mln), RF (~0.24 mln), SC (~0.24 mln), CC (~0.13 mln), ISLE (~0.13 mln), XNCR (~0.13 mln), NCR (~0.08 mln)
  • Increased positions in: NWL (to ~6.39 mln shares from ~1.87 mln shares), DLTR (to ~3.5 mln from ~0.04 mln), ADBE (to ~3.79 mln from ~1.1 mln), MYL (to ~3.8 mln from ~1.34 mln), AET (to ~2.23 mln from ~0.01 mln) FB (to ~3.78 mln from ~1.72 mln), VMC (to ~2.05 mln from ~0.34 mln) CI (to ~2.01 mln from ~0.46 mln), UHS (to ~6.13 mln from ~4.58 mln),
  • Maintained positions in: PFE (~22.85 mln shares), SABR (~20.75 mln shares), TDG (~0.78 mln shares), SHPG (to ~1.43 mln shares from ~0.57 mln shares), INSY (to ~0.27 mln from ~0.2 mln), MYGN (to ~0.19 mln from ~0.15 mln), AKRX (to ~0.15 mln from ~0.12 mln), LULU (to ~0.06 mln from ~0.04 mln)
  • Closed positions in: RDN (from ~9.3 mln shares), ERIC (from ~8.08 mln), LVLT (from ~5.59 mln), DG (from ~2.66 mln), KSU(from ~0.52 mln), SUM (from ~0.49 mln), SPY (from ~0.24 mln), NE (from ~0.21 mln), KATE (from ~0.17 mln)
  • Decreased positions in: PM (to ~0.04 mln shares from ~7.23 mln shares), COMM (to ~10.03 mln from ~16.5 mln), LRCX (to ~1.8 mln from ~4.55 mln), AAPL (to ~0.01 mln from ~1.99 mln), USB (to ~0.87 mln from ~2.71 mln), CMCSA (to ~1.22 mln from ~2.79 mln), BUD (to ~0.21 mln from ~1.65 mln), AXP (to ~2.34 mln from ~3.56 mln), WCN (to ~4.69 mln from ~5.89 mln)

>>> Greenlight Capital (David Einhorn) discloses updated portfolio positions in

Greenlight Capital (David Einhorn) discloses updated portfolio positions in 13F filing: Increased RAD / MYL positions
Highlights from 2016 Q4 filing as compared to 2016 Q3 filing:
  • New positions in: FRED (~1.5 mln shares), AA (~1.28 mln), SYT (~0.93 mln), MON (~0.41 mln)
  • Increased positions in: RAD (to ~20.46 mln shares from ~13.44 mln shares), MYL (to ~8.67 mln from ~6.4 mln), VOYA (to ~5.92 mln from ~5.17 mln), AAPL (to ~5.81 mln from ~5.19 mln), PVH (to ~0.61 mln from ~0.53 mln)
  • Maintained positions in: GRBK (~24.12 mln shares), AER (~12.62 mln shares), CPN (~10.96 mln shares), GDX (~7.94 mln shares), YHOO (~4.28 mln shares)
  • Closed positions in: X (from ~3.09 mln shares), KORS (from ~3.07 mln), ACM (from ~2 mln), ARRS (from ~1.83 mln), GLBL(from ~1.63 mln), TERP (from ~1.53 mln), TTWO (from ~1.38 mln), GEO (from ~0.29 mln)
  • Decreased positions in: CC (to ~8.95 mln shares from ~16.37 mln shares), GM (to ~13.17 mln from ~17 mln), CNX (to ~15.4 mln from ~17.87 mln), AGR (to ~1.57 mln from ~3.09 mln), YELP (to ~0.87 mln from ~2.3 mln), DSW (to ~2.14 mln from ~3.57 mln), TWX (to ~3.31 mln from ~3.86 mln

(FT) TCI attempts to block €8.5bn Safran takeover of Zodiac


(TCI letters attached)

TCI attempts to block €8.5bn Safran takeover of Zodiac
Sir Chris Hohn’s activist fund says aerospace deal is overpriced with questionable synergies

One of Europe’s largest activist hedge funds has launched a campaign to block Safran’s €8.5bn takeover for its rival Zodiac, lambasting the deal to merge the two aerospace equipment companies as having “no strategic rationale”. 

In a move aimed at halting the deal, The Children’s Investment Fund, run by Sir Chris Hohn, has written to the French market regulator, the AMF, asking that Safran investors be given the chance to vote on the takeover before the aerospace group starts buying Zodiac shares. 

The move could pit TCI against the French government, which is Safran’s largest shareholder with a 14 per cent stake and harbours hopes of creating a national aerospace champion. TCI, which manages $14bn of assets, owns 4.1 per cent of Safran’s shares. 

At the forthcoming AGM, Safran shareholders will not be given a vote on the Zodiac deal. Sir Chris said that TCI would consider litigation against the Safran board “if they persist in avoiding a proper shareholder vote on the deal”. 

TCI has also written to Safran’s chairman to call on the company to drop the offer for Zodiac. 

Last month Safran, which produces jet engines, agreed to buy Zodiac, the maker of aircraft seats and cabin interiors, which has suffered from a series of crippling production problems. Zodiac has issued nine profit warnings over the past three years. 

TCI has built a reputation as an activist investor following a string of high-profile campaigns in Europe, Asia and the US. Last year it called for an overhaul of executive pay at Volkswagen in the wake of the diesel emissions scandal that rocked the German automaker. 

In a presentation arguing against the deal, TCI argues the company is “massively overpaying” for Zodiac for “questionable synergies”. 

Sir Chris said that Safran had “a terrible history” of executing and integrating takeovers. 

At the time of the deal announcement, Philippe Petitcolin, chief executive of Safran, said that while the profitability of Zodiac at the moment was “far from satisfactory”, the company was on the right track and improvement could be “accelerated” with their help. 

Safran declined to comment and the AMF said it had not received any letter. 

TCI has held shares in Safran since 2012, when it previously called on the company to stop making “value-destructive” acquisitions and specifically not to bid for Zodiac. 

TCI argues that the current structure of Safran’s offer for Zodiac could give preferential treatment to its family shareholders and allow them to derive tax benefits from accepting their payment in Safran stock that may not be available to other investors. 

In its presentation on Safran, TCI argues that Safran is “hugely undervalued” and that it would be worth €100 per share if it ditched its offer for Zodiac, compared to €64 today. Since Safran announced the deal for Zodiac, its shares have fallen by more than 4 per cent. 

TCI is proposing Safran instead uses the €2bn of cash generated from selling its security business to launch a share buyback. 

TCI’s other campaigns in Europe have included a battle to block Deutsche Börse’s takeover of the London Stock Exchange that resulted in the resignation of the German company’s chief executive, and forcing the Dutch lender ABN Amro to put itself up for sale. 

Some analysts say said there is a strong business case for the deal, giving Safran increased exposure to the booming civil aerospace sector. But others warned that the deal could distract Safran at a time when it is facing its biggest ever industrial challenge — increasing production of its new Leap jet engine that will be used on next generation versions of narrow-body aircraft made by Boeing and Airbus. 

John Armitage of Egerton Capital, which owns shares in Safran, said that there were not “many better businesses in Europe” but that it “did not become a better business by acquiring Zodiac”. Shareholders should have a vote on the deal before, rather than after, the tender, he added.

(BofA-ML) ‘Bull-o-meter’: a 6-year high

Macro improving: more upbeat, but worried
Managers have turned bearish cash for the first time since 2011 and have turned more
bullish on equities and bonds. They are reducing their equity underweights, adding to
risk, and reducing their cash overweight. Macro forecasts held steady with USDZAR at
13.57 in +12M; 10Y at 8.68%. A lower 42% expect SA to lose ‘IG’ (92%, Apr’16). Value is
preferred: banks, general miners and oil. Disliked: construction, real estate and gold.
5 signs that managers are Bullish equities
1. A net 42% think the equity market will be up in six months; 2. They are increasingly
comfortable with valuations (42% say equities are overvalued vs. 60% last month); 3.
Expected +12M equity returns are at their highest since Apr’13 (7.2%); 4. Expected EPS
growth is at its highest since Apr’12 (12%); 5. Our ‘Bull-o-meter’ (aggregate of FMS
questions to gauge survey bullishness) turned positive for the first time since May’13.
Lukewarm AA conviction: Cash level remain high at 17%
Asset Allocation (AA): bullish equities and bonds, bearish cash and commodities, mild
offshore OW (only net 8% OW vs. peak of 70% in Jun’15). Cash levels remain stubbornly
high at 17%, but are off the Jun’16 peak (20%). Key risks to max bullishness and lower
cash remain concerns on ‘a further de-rating’ and ‘policy shifts to the left’ (survey high).
Domestic economic optimism a record high; no repo cut H1
100% of managers surveyed expect the economy to improve and inflation to fall over
the next 12 months. This is the 1st instance of this combination in the history of the
survey (since ’98) and an almost mirror image of Jan’16 (banks outperformed retail by
43% since then). A net 33% of managers think monetary policy is ‘too restrictive’ and
78% expect a rate cut (56% say Q3’17). ‘Budget 2017’ expectations are focused on
higher personal income tax rates and tighter restrictions on govt spend/corruption.

>>> Kate Spade asks for initial bids, sources say

Kate Spade asks for initial bids, sources say
14 FEB 2017
  • Low-teens EBITDA valuation predicted
  • Strategic deal could rationalize handbags

Kate Spade & Co [NYSE:KATE] is expected to collect first-round bids later this month, two sources briefed on the situation said.

The sale process for the New York-based handbag and accessories maker and retailer is dominated by strategics with only a few financial sponsors in the mix, these sources said. Some financial sponsors that expressed an interest in the company have not been able to participate in the process, one of the sources said.

By blocking private equity, Kate Spade’s board of directors may be looking to create an aggressive bidding dynamic amongst strategics, but these suitors are unlikely to overpay either, the first source and a sector advisor said.

Kate Spade is likely to be valued at a low-teens EBITDA multiple in a sale, the two sources said. The company already trades at a 10x-11x adjusted EBITDA valuation and a deal is likely to be struck in the 13x EBITDA valuation range, the second source said.

US and European luxury brands Michael Kors [NYSE:KORS], Coach [NYSE:COH], LVMH Moet Hennessy Louis Vuitton, PVH [NYSE:PVH] and VF [NYSE:VF] and Chinese group Li & Fung are all considered logical suitors for Kate Spade.
Kate Spade’s valuation makes it tough for financial sponsors to compete with strategics, the second source said. It is possible that some strategic suitors could look to partner with private equity to bid for Kate Spade to help finance a deal without a buyer needing to tap the capital markets, this source said.
In late December, The Wall Street Journal reported Kate Spade was exploring a sale with advisors. The stock has since jumped over 30%. Perella Weinberg is advising the company on the sale, as reported.
Few financial sponsors are likely to be comfortable with a large retail buyout like Kate Spade, a second sector advisor said. Funds like TPG already own underperforming retailers and would be reluctant to increase their exposure to the sector, this advisor said.

In November, hedge fund Caerus Investors sent a letter to Kate Spade’s board urging it to explore a sale as the company would make a “great” acquisition candidate with its stock trading at a discount to its peers.
In January, this news service reported that Caerus has engaged constructively with Kate Spade before and after the fund sent a letter and it was convinced that neither management nor the board would stand in the way of a sale if it was the best path toward value creation.

The company is scheduled to report earnings on 23 February. A spokesperson for Kate Spade declined to comment.

Coach and Michael Kors would benefit from acquiring Kate Spade by gaining a growth platform and the option to easily convert some of their underperforming stores into Kate Spade stores and boost sales, a Kate Spade shareholder said.

Kate Spade, Coach and Michael Kors have a good share of the US handbags market and they fiercely compete on promotions to boost sales, the shareholder said. If Kate Spade was bought by either Coach or Michael Kors, the industry dynamic would be more manageable as a competitor would be eliminated, he said.

The second sector advisor said that with Kors now trading below 5x EBITDA, acquiring Kate Spade could be risky, especially if the public markets do not reward it for doubling down on handbags. There are already concerns that the handbag space is oversaturated and larger players like Kors might be better served by diversifying, this advisor added.
The second source, however, said Kors needs a brand like Kate Spade to accelerate its growth as standalone single brands are “a thing of the past.” Acquiring Kate Spade could help Kors capitalize on its built-in infrastructure and extract synergies.

Kors shares plunged earlier this month when it reported a more than 6% decline in same-store sales. CEO John Idol said the company continues to look for acquisitions with a preference for larger deals.

Meanwhile, LVMH does not view US brands as luxury, the first sector advisor said, and it is unlikely to see Kate Spade as an opportunity to own a new true global luxury brand. Christian Dior [EPA:CDI], the luxury goods group, is the main holding company of LVMH, owning 40.9% of its shares and 59.01% of its voting rights.

The second source, however, noted that Kate Spade’s brand appeals to millennials and is a sizeable asset, so even if it does not align perfectly with LVMH’s interest, the France-based luxury brand house could unlock value through a Kate Spade acquisition.

The strategic review of Kate Spade comes as Republicans in Congress debate changes to the US corporate tax code that would reduce the overall tax rate but would also implement a border adjustment tax that could negatively impact large importers.
The proposal could impact this sale process as strategics may first want to gain greater visibility on the new tax regime, the shareholder said. The second source said that as more information has come out, retailers have become more comfortable with the proposals and stocks have started to go back up. He noted that the border adjustment tax should not be looked at in isolation as other benefits would accrue from the overall comprehensive tax reform.

>>> Blue Ridge Capital (John Griffin) discloses updated portfolio positions in 1

Blue Ridge Capital (John Griffin) discloses updated portfolio positions in 13F filing: New BAC / WFC positions, Increases WLL / FIT / NKE / OAS positions
Highlights from 2016 Q4 filing as compared to 2016 Q3 filing:
  • New positions in: BAC (~13.95 mln shares), WFC (~5.56 mln),MIDD (~0.23 mln)
  • Increased positions in: WLL (to ~11.67 mln shares from ~1.65 mln shares) FIT (to ~3.87 mln from ~1.04 mln), NKE (to ~4.99 mln from ~2.6 mln), OAS (to ~6.87 mln from ~4.55 mln) DVN (to ~2.62 mln from ~0.92 mln), AMBA (to ~1.63 mln from ~1 mln) AGN (to ~1.54 mln from ~1.26 mln), PXD (to ~0.63 mln from ~0.37 mln),
  • Maintained positions in: C (~5.57 mln shares), CDK (~5.55 mln shares), FB (~3.41 mln shares), GOOGL (~0.3 mln shares)
  • Closed positions in: INFO (from ~5.82 mln shares), ECA (from ~4.29 mln), CNX (from ~3.37 mln), DLTR (from ~2.21 mln),ALLE (from ~1.73 mln), WBA (from ~1.68 mln), LNG (from ~1.47 mln), FTV (from ~1.12 mln), GCP (from ~0.79 mln)
  • Decreased positions in: SWN (to ~6.72 mln shares from ~8.2 mln shares), HDS (to ~7.18 mln from ~8.57 mln), ADSK (to ~7.24 mln from ~8.49 mln), ST (to ~3.89 mln from ~4.85 mln), KHC (to ~1.67 mln from ~2.34 mln), ULTA (to ~0.56 mln from ~1.06 mln), DHR (to ~1.76 mln from ~2.25 mln),GRA (to ~2.7 mln from ~3.16 mln), NFLX (to ~1.39 mln from ~1.85 mln), RRC (to ~2.04 mln from ~2.47 mln)

>>> Marcato Capital (Richard McGuire) discloses updated portfolio positions in 1

Marcato Capital (Richard McGuire) discloses updated portfolio positions in 13F filing: Affirms lowered M position and liquidated URI
Highlights from 2016 Q4 filing as compared to 2016 Q3 filing:
  • New positions in: AIR (~1.07 mln shares), ERI (~0.27 mln),BREW (~0.24 mln)
  • Increased positions in: CSC (to ~1.75 mln shares from ~1.48 mln shares), IAC (to ~1.04 mln from ~0.92 mln)
  • Maintained positions in: TPHS (~4.53 mln shares), TEX (~1.09 mln shares), SIG (~1.01 mln shares - discussed yesterday),BWLD (~0.95 mln shares - active position), LBRDA (~0.51 mln shares)
  • Closed positions in: BK (from ~2.9 mln shares), URI (from ~1.05 mln - as discussed yesterday on CNBC), PNK (from ~0.18 mln), ADS (from ~0.18 mln), AIRM (from ~0.12 mln)
  • Decreased positions in: BID (to ~2.62 mln shares from ~4.67 mln shares - discussed yesterday on CNBC), M (to ~0.7 mln from ~1.43 mln - as disclosed yesterday), LBRDK (to ~0.06 mln from ~0.68 mln), GT (to ~3.84 mln from ~4.39 mln),CBPX (to ~0.13 mln from ~0.21 mln)