Billionaire Leone Boosts Stake in This REIT, Ubben Sells More Shares of Motorola Solutions Inc. (MSI), Plus Two Other Hot Moves

It is generally believed that individuals seeking to become millionaires (and who isn’t?) need to think and act like millionaires. That’s probably one reason why most retail investors closely follow hedge funds’ moves. As middle-income earners may not have the necessary resources to directly invest into a hedge fund, the least they can do is track their moves. Most retail investors tend to construct their equity portfolios to make money rather than preserve capital, so the practice of examining hedge fund activity may assist them in achieving that goal. For that reason, the following article will discuss four SEC filings submitted by several widely-followed investment firms.

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Let’s kick off our discussion by analyzing the SEC filing submitted by Christian Leone’s investment firm. According to the Schedule 13G filing, Luxor Capital Group LP currently owns 4.23 million shares of Altisource Residential Corp (NYSE:RESI), which account for 7.6% of the company’s outstanding common stock. Mr. Leone’s investment firm reported owning 2.54 million Class B shares of Altisource Residential in its 13F filing for the October-to-December period. Altisource Residential Corp (NYSE:RESI) operates as a real estate investment trust (REIT) focusing on single-family rental properties for working class families across the Unites States. The REIT pursues a diversified acquisition strategy that involves the purchase of retail properties either in bulk or on a one-by-one basis, as well as the acquisition and management of sub-performing and non-performing mortgage loans. The company’s portfolio of residential mortgage loans is expected to be converted into single-family rental properties. Earlier this month, analysts at JMP Securities cut its rating on the REIT to ‘Market Perform’ from ‘Market Outperform’ but maintained its $17 price target on the stock. JMP Securities believes that the company’s transition into a 100% single-family rental REIT will impact its cash flow per share and dividend in the near-term. Shares of Altisource Residential have declined by 44% in the past year, after having lost 5% thus far in 2016. Jamie Zimmerman’s Litespeed Management reported ownership of 2.69 million shares of Altisource Residential Corp (NYSE:RESI) through the latest round of 13F filings.

In a new Schedule 13D filing, Mario Gabelli’s GAMCO Investors and its affiliates reported owning 567,684 shares of PowerSecure International Inc. (NYSE:POWR), which make up 2.52% of the company’s outstanding shares. This represents a new position for Mr. Gabelli’s funds, as GAMCO’s quarterly 13F for the fourth quarter did not contain any shares of the energy services company. PowerSecure International Inc. (NYSE:POWR) is a provider of products and services to electric utilities and their commercial, institutional and industrial customers. On February 24, PowerSecure International announced that it had agreed to be acquired by Atlanta-based electric utility Southern Co (NYSE:SO) for approximately $431 million. Under the terms of the freshly-inked deal, PowerSecure shareholders will receive $18.75 per share in cash, which represents an impressive premium of approximately 90% from the stock’s closing price on February 24. PowerSecure’s shares are currently trading at a discount of less than 1% from the aforementioned all-cash offer however, so GAMCO appears to simply be attempting to squeeze out small gains from its investment in PowerSecure International. The number of hedge fund vehicles with stakes in the energy services company increased to 12 from 10 during the December quarter. Royce & Associates, founded by Chuck Royce, acquired a new stake of 236,000 shares in PowerSecure International Inc. (NYSE:POWR) during the period.

The concluding page of this article covers two more filings submitted with the SEC by two widely-known hedge funds.

As revealed in a Form 4 filing, Jeffrey Ubben’s ValueAct Capital unloaded 896,000 shares of Motorola Solutions Inc. (NYSE:MSI) in the three-day period of Tuesday through Thursday, at a weighted average price of $72.39 per share, cutting its overall holding in the company to 8.76 million shares. According to a separate Form 4 filing discussed by Insider Monkey earlier this week, ValueAct sold 1.31 million shares of Motorola Solutions from last Thursday through Monday of this week. The freshly-trimmed stake accounts for 5.02% of the company’s outstanding common stock. The friendly activist investor disclosed an ownership stake of 5.9% in Motorola Solutions in June 2011, after activist Carl Icahn forced cell phone maker Motorola to spin-off its government-and-enterprise arm, which became Motorola Solutions. Investors at the time were saying that Motorola Solutions Inc. (NYSE:MSI) had too much cash on hand and too little debt on its balance sheet (as backwards as that thinking may appear to be). Mr. Ubben’s activist hedge fund accumulated a 10% stake in the telecommunications giant between 2011 and 2012, and his friendly approach to activism has delivered great results since then. The provider of mission-critical communication infrastructure, devices, accessories, software and services has seen its shares advance by 66% over the past five years, which more or less reflects ValueAct’s return on its initial investment in Motorola Solutions. The smart money sentiment towards the company declined noticeably in the fourth quarter of 2015, with the number of funds invested in Motorola dropping to 22 from 27 quarter-over-quarter. William B. Gray’s Orbis Investment Management trimmed its stake in Motorola Solutions Inc. (NYSE:MSI) by 12% in the December quarter, entering 2016 with 13.05 million shares.

According to a separate Form 4 filing, Baker Bros. Advisors LP, managed by Julian Baker and Felix Baker, has acquired 800,000 shares of Incyte Corporation (NASDAQ:INCY) over the course of this week, as well as exercised 60,000 non-qualified stock options at an exercise price of only $3.86. After the recent transactions, the healthcare-focused investment firm owns 23.65 million shares of Incyte, which represent 12.6% of the company’s outstanding common stock. It should be noted that this stake does not include the shares of common stock held directly by Julian C. Baker and Felix J. Baker. Incyte Corporation (NASDAQ:INCY) is a biopharmaceutical company that focuses on the development of proprietary therapeutics for the treatment of serious unmet medical needs, with a particular focus on oncology. The company’s first FDA approved product, JAKAFI (ruxolitinib), was approved in November 2011 for treating patients suffering with intermediate or high-risk myelofibrosis and approved in December 2014 for treating patients suffering with polycythemia vera, both of which are rare blood cancers. Incyte Corporate generated total revenue of $753.75 million in 2015, which was an increase from $511.50 million in 2014 and $354.95 million in 2013. A total of 39 hedge funds that we track were invested in Incyte at the end of December, holding almost 15% of the company’s outstanding common stock. Samuel Isaly’s OrbiMed Advisors had 2.83 million shares of Incyte Corporation (NASDAQ:INCY) in its portfolio at the end of 2015.

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