Bill Ackman Cuts Mondelez Stake, Carl Icahn Trims Position in This Software Maker, Plus 2 Other Moves

Both small- and large-scale investors share a valuable asset when it comes to equity investing: information. By default, better-informed investors should generally outperform those investors possessing less information. As the saying goes, information is the key to success in today’s business environment. With greater disclosure from the hedge fund industry, retail investors can get a glimpse into the minds of the world’s most successful money managers. For that specific reason, this article will discuss four filings recently submitted with the SEC by several widely-known hedge fund vehicles including as Pershing Square and Icahn Capital LP.

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In a freshly-amended 13D filing, Bill Ackman’s Pershing Square reported owning 88.20 million shares of Mondelez International Inc. (NASDAQ:MDLZ), which account for 5.6% of the company’s outstanding shares. This stake includes 22.94 million shares of common stock and 65.26 million shares of common stock underlying American-style call options. The highly-scrutinized activist hedge fund owned 43.37 million shares of common stock on December 31, excluding shares underlying forward purchase contracts or shares underlying call options. Therefore, Pershing Square trimmed its stake in the snack company by 20.42 million shares recently; a move that should not represent a reason for concern among investors. According to the public filing, Mr. Ackman’s activist firm reduced the stake in Mondelez International Inc. (NASDAQ:MDLZ) because the stake had become an outsized position in their portfolio in light of its initially large size and its outperformance relative to other holdings. This move comes after Pershing Square lost approximately $1 billion on Tuesday from its investment in Valeant Pharmaceuticals Intl Inc. (NYSE:VRX), after the embattled drugmaker reported weaker-than expected bottom-line results, weak guidance, as well as possible default risk on its bonds. Going back to the maker of Oreo biscuits, shares of Mondelez have advanced by 18% over the past 12 months despite having lost 8% thus far in 2016. The company’s net revenue for 2015 was $29.64 billion, which represents a sizable decrease from $34.24 billion in revenue in 2014. Nonetheless, Mondelez’s organic net revenue increased by 3.7% year-over-year in 2015, after reaching a growth rate of 2.5% in 2014. Nelson Peltz’s Trian Partners reported owning 48.03 million shares of Mondelez International Inc. (NASDAQ:MDLZ) in its 13F filing for the December quarter.

Let’s head to the next two pages of this article, where we discuss three separate filings submitted by Icahn Capital LP and two other hedge fund vehicles.

On March 9, Carl Icahn’s Icahn Capital LP entered into a stock purchase agreement with Nuance Communications Inc. (NASDAQ:NUAN), under which the activist investment firm agreed to sell nearly 26.32 million shares to the provider of voice recognition solutions, at a price of $19.00 per share. The transaction closed earlier this week, which reduced Icahn Capital’s stake in Nuance to 34.47 million shares. More importantly, the widely-followed activist fund sold an additional 4.40 million shares of Nuance on March 16 at a price of $19.25 per share, as revealed in a newly-amended 13D filing on the company. Mr. Icahn’s investment firm currently owns 30.07 million shares of Nuance Communications Inc. (NASDAQ:NUAN), which constitute 9.88% of the company’s common stock. Several news outlets have been suggesting that the revered activist investor is trying to cash out his firm’s position in the speech-recognition software maker without incurring significant losses, as his initial investment thesis on the company might not have been entirely accurate. Shares of Nuance have advanced by 37% over the past 52 weeks and trade at a forward P/E multiple of 12.0, which is still well below the ratio of 16.7 for the S&P 500 Index. A total of 31 money managers watched by Insider Monkey had stakes in Nuance at the end of December, stockpiling almost 26% of its outstanding shares. Columbus Circle Investors, managed by Clifford G. Fox, had 4.46 million shares of Nuance Communications Inc. (NASDAQ:NUAN) in its portfolio at the end of 2015.

According to a separate 13D filing, Jeffrey Smith’s Starboard Value currently owns 2.81 million shares of Four Corners Property Trust Inc. (NYSE:FCPT), which represent 4.7% of the company’s outstanding shares. This is up from the stake of 2.57 million shares disclosed in the fund’s previous 13D filing on the company, which was submitted with the SEC in January. All shares owned by Starboard Value were received in connection with Darden Restaurants Inc. (NYSE:DRI)’s spin-off of 418 properties into the real estate investment trust Four Corners Property Trust. Four Corners began operating as a REIT on January 1, which means that the company has to distribute at least 90% of its adjusted taxable income to shareholders. Therefore, Four Corners Property Trust Inc. (NYSE:FCPT) paid two dividends in the first quarter of 2016: an all-cash dividend of $8.5 million paid on January 29 ($0.20 per outstanding share at that point in time); and a cash-and-stock dividend of $347 million paid on March 2 (20% was paid in cash and 80% in shares of common stock). The distribution involved 17.09 million shares and boosted the number of outstanding shares by 40% to 59.83 million shares. All-in-all, the recent increase in Starboard’s stake reflects the aforementioned distribution of shares. A total of 24 hedge funds in our system had long positions in the REIT at the end of 2015. Dmitry Balyasny’s Balyasny Asset Management was one of them, owning 630,548 shares of Four Corners Property Trust Inc. (NYSE:FCPT) on December 31.

As revealed by another 13D filing, Ashe Capital Management, launched by William Crowley, William Harker, and Stephen Blass, currently owns 10.03 million shares of Allison Transmission Holdings Inc. (NYSE:ALSN), which make up 5.9% of the company’s outstanding shares. This represents an increase from the stake of 9.42 million shares disclosed in the fund’s 13F for the December quarter. The filing also reveals that Ashe Capital withdrew its director nomination and governance proposals for consideration at the company’s annual meeting of stockholders, after Allison Transmission Holdings Inc. (NYSE:ALSN) announced that the Board added “two new qualified independent directors and, most importantly, determined to nominate another stockholder to the Board” and also adopted three corporate governance enhancements proposed by Ashe Capital. Those governance proposals included the declassification of the Board, which means that the entire Board will be elected annually beginning at the 2017 meeting of stockholders; the adoption of a majority voting standard for the election of directors in uncontested elections; and making proxy access available to the company’s shareholders starting with the 2017 meeting of stockholders.

The designer and manufacturer of commercial and defense fully-automatic transmissions has seen its shares decline by 18% over the past year, though they are trading in positive territory thus far in 2016. The smart money sentiment towards Allison Transmission declined in the fourth quarter, as the number of funds with stakes in the company dropped to 27 from 40 quarter-over-quarter. Jeffrey Ubben’s ValueAct Capital owns 19.13 million shares of Allison Transmission Holdings Inc. (NYSE:ALSN) as of the end of the December quarter.

Disclosure: None