Activist Keith Meister Unloads Large Pfizer (PFE) Position, Takes Stakes in B/E Aerospace (BEAV), Johnson Controls (JCI)

A protege of billionaire Carl Icahn, Keith Meister founded Corvex Capital in 2011, managing to attract $250 million in seed money from George Soros. The fund currently manages roughly $12.6 billion worth of assets, with more than half of that invested in U.S. equity positions. At the end of the second quarter, the fund’s U.S equity portfolio was valued at $7.47 billion, 33% of which was invested in consumer discretionary stocks, while financial stocks amounted to 32% of the portfolio’s value. Keith Meister and Corvex Capital’s war with the management of Williams Companies Inc (NYSE:WMB) has held the headlines for a long time, while some of their other moves have gone under the radar.

In this article we’ll take a look at some of the tweaks that Mr. Meister and his team made to their fund’s equity portfolio during the second quarter, with an eye on boosting their performance during the third quarter.

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Dumps Pfizer After Merger Failure

First up is Pfizer Inc. (NYSE:PFE), the pharmaceutical giant that was on the brink of sealing one of the largest takeovers of all time. The company’s $160 billion deal to takeover Allergan plc Ordinary Shares (NYSE:AGN) was abandoned in April due to new tax regulations from the Treasury Department that made tax-inversion mergers less profitable. During the second quarter, Corvex Capital unloaded 17.5 million shares of Pfizer Inc. (NYSE:PFE) as the highly anticipated deal collapsed. Soon after that, Pfizer Inc. (NYSE:PFE) turned to smaller American biotechnology companies to look for takeover candidates and has offered to acquire Anacor Pharmaceuticals Inc (NASDAQ:ANAC) for $5.2 billion or $99.25 per share in cash. The company makes Kerydin, a topical treatment for toenail fungus, and is also waiting on the FDA approval for crisaborole, an ointment for the treatment of atopic dermatitis and psoriasis.

Boosted Bet On TeamHealth

Next up is TeamHealth Holdings Inc (NYSE:TMH), a provider of healthcare professional staffing and administrative services. During the second quarter, Keith Meister and his team increased the size of their investment in the company by 84% to 2.76 million shares valued at approximately $112 million. So far this year, the stock has continued its decline, despite a couple of short rallies. Shares are currently trading at $35 apiece, down by 19% year-to-date. TeamHealth Holdings Inc (NYSE:TMH) has a market cap of $2.6 billion and is currently trading at a trailing P/E ratio of 58, twice the industry average P/E of 29, according to data compiled by Yahoo! Finance. For the second quarter, the company posted a profit of $18.8 million, or $0.66 per share when adjusted for one-time costs, and $1.12 billion in revenue, mostly in-line with analysts’ projections of $1.17 billion in revenue and earnings of $0.66 per share. Barry Rosenstein is also keeping an eye on TeamHealth Holdings Inc (NYSE:TMH), as his fund JANA Partners held 5.89 million shares of the company at the end of June, a position valued at $239 million.

We’ll take a look at three more of the activist investor’s biggest moves during the second quarter on the next page.

Successful Merger Bet

Corvex Capital found more success with a merger bet in the auto industry. The fund initiated a fresh stake in Johnson Controls Inc (NYSE:JCI), a manufacturer of auto parts, having amassed approximately 2.68 million shares of the company worth in excess of $118 million as of June 30. Johnson Controls Inc (NYSE:JCI) shareholders approved the company’s merger with Tyco International plc (Ireland) Ordinary Share (NYSE:TYC) on Wednesday and the deal is expected to close in September. Like Pfizer, Johnson Controls was looking for a tax-inversion deal to reduce its tax bill. The newly-formed Johnson Controls Plc will be based in Ireland, where the corporate tax rate is 12.5%, compared to the 35% rate in the United States. The companies expect to generate $650 million in savings over the course of three years, including $150 million in annual tax savings. Andrew Feldstein and Stephen Siderow‘s Blue Mountain Capital also held a sizable stake in Johnson Controls Inc (NYSE:JCI) at the end of the second quarter, totaling 3.02 million shares worth $134 million.

B/E Aerospace To Take Off?

Corvex Capital also made a big bet on B/E Aerospace Inc (NASDAQ:BEAV) during the quarter, having acquired a little over 2.7 million shares worth $125 million at the end of June. A manufacturer of aircraft cabin interior products, B/E Aerospace Inc (NASDAQ:BEAV) has a market cap of $4.96 billion and pays an annual dividend of $0.84 per share, providing investors with a 1.76% annual yield. The stock is currently trading at a trailing P/E ratio of 17, slightly lower than the industry average of 18 as per Yahoo! Finance data. In the most recent quarter, the company managed to boost its revenue by 7.6% to $753 million and posted a profit of $0.84 per share, surpassing Wall Street’s expectations of $0.82 per share. B/E Aerospace Inc (NASDAQ:BEAV) has been trading in a range since June, but is still up by 16% for the year. Jonathon Jacobson’s Highfields Capital Management is also betting on this stock, having reported ownership of 4.76 million shares of it in its latest 13F filing.

Bullish On Ball Corporation

With Ball Corporation (NYSE:BLL) consolidating its position in the metal packaging products market, Keith Meister has decided to step up his interest in the company. Corvex Capital’s stake in the company registered a 35% bump during the second quarter, to 3.46 million shares valued at roughly $250 million. Ball Corporation (NYSE:BLL) had a fantastic second quarter, having recorded an 18% increase in earnings to $1.05 per share, topping analysts’ estimates of $0.99 per share, though revenue came in at $2.03 billion, lower than the consensus target of $2.15 billion. Ball Corporation recently completed the acquisition of British can maker Rexam for $6.1 billion, with the combined company now representing 60% of the U.S. beverage-can market and 69% of the European market. According to Ball Corporation (NYSE:BLL)’s projections, the deal will result in $300 million worth of savings per year. Billionaire Ken Griffin‘s Citadel Investment Group initiated a 2.08 million-share position in Ball Corporation during the second quarter, worth $150 million at the end of June.

Disclosure: None