Billionaire Barry Rosenstein’s Top Moves Ahead of 2016

QUALCOMM, Inc. (NASDAQ:QCOM) was JANA’s largest holding at the end of September, but the investor dumped around 19.34 million shares during the fourth quarter, cutting the position to 9.21 million shares valued at $460.47 million. Last year, JANA pushed for a Strategic Realignment Plan and in its third-quarter investor letter, said that the plan was being implemented by Qualcomm’s management and had the potential to increase returns. In addition, JANA said that QUALCOMM, Inc. (NASDAQ:QCOM)’s stock was undervalued, but it might have changed its thesis after the stock lost some 7% in the last three months of 2015 and has declined by another 7% since the beginning of 2016. Over the last 52 weeks, the stock is down by 34% and it currently sports a dividend yield of almost 4%, while trading at 9.5-times forward earnings, which makes the stock look cheap at current levels. Yesterday, Sanford C. Bernstein analyst Stacy Rasgon upgraded the stock to ‘Outperform’ from ‘Market Perform’, saying that the decline had pushed QUALCOMM, Inc. (NASDAQ:QCOM)’s stock towards a more attractive risk/reward profile. The analyst also raised the firm’s price target on the stock to $55.00 from $50.00. David Blood and Al Gore’s Generation Investment Management reported holding 13.25 million shares of Qualcomm in its latest 13F filing.

Finally, let’s take a look at two new positions that JANA initiated during the fourth quarter. One of them is a $295.97 million stake in Pfizer Inc. (NYSE:PFE), which contains 9.17 million shares. The move was made amid Pfizer Inc. (NYSE:PFE)’s acquisition of Allergan plc Ordinary Shares (NYSE:AGN), in which JANA cut its holding by 38% during the quarter, to 1.16 million shares. The merger deal, worth $160 billion, would create the largest drugmaker and would allow Pfizer to move its headquarters to Ireland, which would allow the company to slash its tax costs. At the same time, the transaction would increase Pfizer Inc. (NYSE:PFE)’s portfolio of branded drugs and could represent good ground for activists to push for the sale of the company’s segment that faces competition from generic drug makers, a move that Pfizer said it would delay for a couple of years. Billionaire Ken Fisher’s Fisher Asset Management owns 32.33 million shares of Pfizer as of the end of December.

Another new stake in JANA’s portfolio is represented by American International Group Inc (NYSE:AIG), in which the fund reported ownership of 4.25 million shares valued at $263.61 million. Even though JANA has not disclosed any plans related to activist involvement, Barry Rosenstein is now at least the third well-known activist among AIG’s shareholders, the other two being Carl Icahn and John Paulson. Earlier this year, Icahn and Paulson reached an agreement with American International Group to appoint two nominees to the board, one of whom is Paulson himself. In October, Icahn wrote a letter to American International Group Inc (NYSE:AIG) pushing for a split into three companies. In November, Icahn issued a statement in which he said that he had conducted several discussions with AIG’s President and CEO Peter D. Hancock, but added that his call for a separation was not taken seriously. JANA’s move might put more pressure on the company in the event that Rosenstein shares the same view about AIG as being “too big to succeed,” as Icahn put it. During the fourth quarter, Icahn’s Icahn Capital raised its stake in American International Group Inc (NYSE:AIG) by 40.88 million shares to 42.24 million shares, while John Paulson’s Paulson & Co. unloaded 3.0 million AIG shares, disclosing a holding of 11.60 million shares in its latest 13F.

Disclosure: None