Activist investing seems to be in vogue nowadays. While shareholders welcome an activist investor’s ambitions to streamline the operations of companies to create more value, management of said companies often have a harder time swallowing their dose of the activism pill, as it often conflicts with their cushy status quo. Keith Meister is one such activist investor who is not exactly welcomed with open arms when shows up on the scene. Meister was the right-hand man of renowned activist Carl Icahn before he established Corvex Capital in March 2011, while another legendary investor, George Soros, has nearly a billion dollars invested in Meister’s fund. Corvex’s assets under management amount to $11 billion and the market value of its public equity portfolio stood at $8.27 billion at the end of the first quarter. We decided to take a closer look at the top new picks of his fund, Corvex Capital, some of which could become targets of his activism in the future. The list is headed by Endo International plc (NASDAQ:ENDP), Applied Materials, Inc. (NASDAQ:AMAT), MGM Resorts International (NYSE:MGM), CIT Group Inc. (NYSE:CIT), and Yum! Brands, Inc. (NYSE:YUM).
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Meister acquired some 1.27 million shares of Endo International plc (NASDAQ:ENDP) valued at $113.52 million during the first quarter. The stake represented 1.37% of the value of the fund’s public equity portfolio. So far this year Endo International plc (NASDAQ:ENDP)’s stock has delivered nearly 17% returns. The $14.97 billion drug manufacturer recently acquired the generic drug maker Par Pharmaceuticals from the private equity firm TPG in a cash-and-stock deal valued at $8 billion. Among other prominent stockholders of Endo International plc (NASDAQ:ENDP) is Ken Griffin‘s managed futures fund, Citadel Investment Group, with some 694,800 shares valued at $62.32 million.
The fund’s second-largest newly initiated equity holding consists of 4.0 million shares of Applied Materials, Inc. (NASDAQ:AMAT) valued at $90.24 million. The precision materials engineering company also earned the favor of Daniel S. Och‘s OZ Management and James Dinan‘s York Capital Management during the first quarter as they significantly increased their respective stakes in Applied Materials, Inc. (NASDAQ:AMAT) to 15.76 million shares valued at $355.46 million and 10.43 million shares valued at $303.46 million respectively. Although trading nearly sideways over the past year, Applied Materials, Inc. (NASDAQ:AMAT)’s stock has depreciated by 18.5% year-to-date.
Next on Corvex’s list is MGM Resorts International (NYSE:MGM), with the fund owning nearly 3.90 million shares valued at $81.99 million. The company’s stock has slumped by about 24% over the last year amid a decline in gaming revenue from Macau. In its financial results for the first quarter MGM Resorts International (NYSE:MGM) beat top line estimates but the bottom line fell short of expectations despite an EBIDTA growth of 10% year-over-year. York Capital Management also initiated a position in MGM Resorts International (NYSE:MGM) during the first quarter of some 9.94 million shares valued at $209.09 million.
On the financial front, Corvexadded a new position of 1.52 million shares of CIT Group Inc. (NYSE:CIT) valued at $68.49 million, to its equity portfolio. The $8.05 billion bank holding company delivered an EPS of $0.59 for the first quarter, which was $0.14 lower than estimates and revenues of $423.80 million also came in $32.94 million lower than estimates. Clint Carlson’s Carlson Capital holds 3.6 million shares of CIT Group Inc. (NYSE:CIT) valued at $162.90 million.
Meister acquired 856,500 shares of Yum! Brands, Inc. (NYSE:YUM) valued at $67.42 million in the first quarter. However, at the Ira Sohn Conference last month, Meister disclosed that his hedge fund now owns about $1.5 billion worth of Yum! Brands, Inc. (NYSE:YUM)’s stock, putting his fund among the top five shareholders of the company and vaulting the position into the second spot in his public equity portfolio in terms of value. He also expressed the idea that the company should spin off its China unit, which has been hit by food-related safety issues over the last couple of years. Dan Loeb’s Third Point held about 3.3 million shares of Yum! Brands, Inc. (NYSE:YUM) valued at $259.78 million at the end of the first quarter.
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