Billionaire Jeffrey Ubben’s Latest Moves and His Top Bets This Year

Amid a 14% rise in its stock, Adobe Systems Incorporated (NASDAQ:ADBE) jumped four spots during the fourth quarter and became ValueAct’s third-largest equity holding at the end of December. The fund didn’t make any changes to its holding during that period and owned 14.01 million shares worth nearly $1.32 billion at the end of December. Shares of Adobe Systems Incorporated (NASDAQ:ADBE) have appreciated significantly since ValueAct initiated its stake and went activist in 2012. Kelly Barlow, a partner at ValueAct Capital, who is also a member of Adobe’s board is not standing for a re-election at Adobe’s 2016 annual meeting along with two other board members and since no replacements have been nominated for these three departing board members, the company has revealed recently that its board will consist of only 10 members instead of 13. For its fiscal 2016 first quarter, analysts are expecting the company to report EPS of $0.61 on revenue of $1.34 billion versus EPS of $0.44 on revenue of $1.11 billion it delivered for the same quarter of the previous year.

Though ValueAct reduced its holding in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) by 23% during the second quarter, the fund didn’t cut its stake any further amid a 55% decline in Valeant Pharmaceuticals Intl Inc (NYSE:VRX)’s stock during the second-half of the year and continued to own nearly 15 million shares of the company worth $1.52 billion at the end of December. However, ValueAct was not the only activist hedge fund whose returns in 2015 were dragged down by Valeant Pharmaceuticals Intl Inc (NYSE:VRX). Bill Ackman’s Pershing Square, which owned nearly 16.6 million shares of the company at the end of last year, also shared a similar fate. So far this year, Valeant Pharmaceuticals’ stock has lost almost 30%. On Monday, the company announced that its CEO Michael Pearson would resume his role following a medical leave. In addition, it also informed shareholders that it is delaying the release of its fourth quarter earnings report and has withdrawn its guidance for the current year.

Despite ValueAct cutting its stake in the company by one-fourth to 56.62 million shares during the fourth quarter, Microsoft Corporation (NASDAQ:MSFT) remained the fund’s top stock pick going into 2016, having amassed 21.74% of the value its equity portfolio at the end of December. ValueAct disclosed this reduction last November, citing the rise of Microsoft Corporation (NASDAQ:MSFT)’s stock price in October and November as the reason behind the move. From the time ValueAct acquired a seat on Microsoft Corporation (NASDAQ:MSFT)’s board in 2013, it started pushing the company to increase its focus on enterprise and cloud operations. Those efforts have started bearing fruit in the last few quarters with Microsoft transitioning its Office software to a a subscription-based revenue model from a licensing-based model and its cloud platform, Azure, showing remarkable growth. Microsoft’s stock trades at a reasonable forward P/E of 16.61, and it sports an attractive dividend yield of nearly 3%. David Fear‘s Thunderbird Partners initiated a stake in Microsoft Corporation during the fourth quarter by purchasing nearly 2.25 million shares.

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