3. Nuance Communications, Inc. (NASDAQ:NUAN)
Soros Fund Management’s Stake Value: $156,745,000
Percentage of Soros Fund Management’s 13F Portfolio: 2.89%
Number of Hedge Fund Holders: 61
Nuance Communications, Inc. (NASDAQ:NUAN) is a Massachusetts-based multinational computer software company that provides speech recognition and artificial intelligence software.
Soros Fund Management initially purchased a stake in Nuance Communications, Inc. (NASDAQ:NUAN) in Q1 2014, before disposing of the shares entirely in Q4 2014. After being inconsistent with its position in Nuance Communications, Inc. (NASDAQ:NUAN) over the years, the hedge fund acquired a stake in the company in Q2 2021, and boosted its position by 112% in Q3 2021, holding shares worth $156.7 million.
On February 7, Nuance Communications, Inc. (NASDAQ:NUAN) reported earnings for Q4 2021, posting a Q4 non-GAAP EPS of $0.08, and a revenue of $321.4 million, down 7.1% year-on-year.
Nuance Communications, Inc. (NASDAQ:NUAN) on April 11, 2021 entered into a merger agreement with Microsoft Corporation (NASDAQ:MSFT). Microsoft Corporation (NASDAQ:MSFT), through a wholly-owned subsidiary, agreed to acquire all of the outstanding shares of Nuance Communications, Inc. (NASDAQ:NUAN) for $56.00 per share in an all-cash transaction. As a result of the merger, Nuance Communications, Inc. (NASDAQ:NUAN) will cease to be a publicly traded company and the deal is expected to close by the end of the first quarter of 2022.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 61 funds were bullish on Nuance Communications, Inc. (NASDAQ:NUAN), with stakes totalling $4.8 billion, as compared to 72 funds in the preceding quarter, holding stakes in Nuance Communications, Inc. (NASDAQ:NUAN) worth $5.5 billion. Pentwater Capital Management held the largest stake in the company in Q3, with 17.5 million shares valued at roughly $967 million.
Here is what Rhizome Partners has to say about Nuance Communications, Inc. (NASDAQ:NUAN) in its Q3 2021 investor letter:
“We also exited our small position in Nuance upon Microsoft’s acquisition. Nuance is a leader in voice recognition software, with dominant market share, and its speech-to-text product is the gold standard in radiology. In addition, by eliminating the need for note taking and allowing doctors to focus on patient care, Nuance could transform the way doctors treat patients. We built a 1% position in Nuance after attending its comprehensive investor day. Our view is that if Nuance can successfully grow its voice-recognition software in doctor’s offices, it could be worth multiples of our cost basis. Microsoft’s acquisition eliminated the multi-bagger upside but also partially validates the belief that Nuance is a high-quality technology company. We exited Nuance with a 62% gain in less than a year. This example is representative of the slight adjustments we made to our portfolio construction. We will allocate to small bets on technology and high-growth companies that could increase our exposure to “right tail” upside. Rest assured that our focus is still roughly 50% real estate, 30% high-quality companies trading at cheap multiples of free cash flow, and the rest in investments with the potential for growth and higher upside.”
