Billionaire Singer Lifts Stake in Cabelas Inc. (CAB), Deerfield Bets on Beloranib, Plus Two Other Moves

Numerous closely-watched hedge fund vehicles are currently disclosing their equity positions as of the end of 2015, so individual investors can monitor what moves hedge fund managers made during the fourth quarter by examining the deluge of 13Fs currently pouring in. Nevertheless, investors tend to use various investment strategies, so some investors might not find these filings handy, as they are more useful for long term-oriented investors. But there is another way through which individual investors can monitor hedge fund moves. Other SEC filings, such as 13D, 13G, and Form 4 filings tend to reveal up-to-date moves made by renowned investment firms, and could be used to mimic hedge funds’ moves with a lag of mere days. Having said that, this article will digest four such filings submitted by widely-known managers Paul Singer, James E. Flynn, and others.

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Let’s kick off our discussion by analyzing the amended 13D filing submitted by Daniel Lewis’ Orange Capital LLC, which reveals an ownership stake of 30.83 million shares of Bellatrix Exploration Ltd (NYSE:BXE). This denotes a decrease of 1.90 million shares from the stake revealed through the fund’s 13F filing for the September quarter. The 30.83 million-share stake accounts for 16.1% of the company’s outstanding common stock. Most importantly, Daniel Lewis resigned from the company’s Board of Directors as of February 10, 2016.

The shares of the Canadian-based, growth-oriented oil and gas company are down by 66% over the past 12-month period. Earlier this month, Moody’s Investors Services completed a review of six Canadian and two U.S. exploration and production companies, including Bellatrix Exploration Ltd (NYSE:BXE). As a result, Moody’s downgraded the company’s Corporate Family Rating to Caa1 from B1, citing “material decline in Bellatrix’s cash flow expected in 2016 and 2017”.  The sustained decline in oil prices is anticipated to weaken the company’s cash flows, so the Canadian E&P company will most likely “be tight on its sole financial covenant in 2016”, which will limit “its ability to draw under the revolver”. Despite that, Bellatrix plans to focus on its Spirit River natural gas play, which is among the lowest supply cost natural gas plays in North America. Jim Simons’ Renaissance Technologies LLC acquired a new stake of 253,000 shares in Bellatrix Exploration Ltd (NYSE:BXE) during the fourth quarter.

The next two pages of this article will discuss three other filings recently submitted with the SEC.

According to a separate 13D filing, Paul Singer’s Elliott Associates L.P. and its affiliates have economic exposure to Cabelas Inc. (NYSE:CAB) of roughly 11.2%. This includes 5.12 million shares of common stock, which make up 7.4% of the company’s outstanding shares, and cash settled swaps with respect to 2.62 million shares. The billionaire’s entities had economic exposure to the specialty retailer of 11.1% in October 2015, which included 4.17 million shares of common stock.

The direct marketer of hunting, fishing, camping, and other related outdoor merchandise has seen its shares decline by 24% over the past year thanks partly to a slump of 15% thus far in 2016. The company’s revenue for the nine months that ended September 26 totaled $2.59 billion, up by 9.1% relative to the same period of the prior year. Total merchandise sales, which accounted for 85% of total revenue, increased by 7.9% year-over-year due to an increase in revenue from new stores. Nonetheless, comparable store sales declined by $32 million year-over-year. It should also be mentioned that Cabelas Inc. (NYSE:CAB)’s operating expenses increased quite visibly during the first nine months of 2015, as the company’s operating income declined by 12.5% year-over-year to $180.87 million. Meanwhile, investors may ask themselves whether Cabalas represents an attractive investment opportunity at the moment. Given that U.S consumer spending was above expectations in January and considering that the stock trades at a forward P/E ratio of 12.22 (which is below the average of 15.87 for the S&P 500 Index), some investors might find Cabalas quite attractive at the moment. Ken Griffin’s Citadel Advisors LLC was not one of them, having sold out its entire stake of 758,687 shares in Cabelas Inc. (NYSE:CAB) during the fourth quarter of 2015.

As revealed by a Form 4 filing, James E. Flynn’s Deerfield Management purchased 267,493 shares of Zafgen Inc. (NASDAQ:ZFGN) this week at prices ranging from $5.51 to $6.25 per share, lifting its overall holding to 2.99 million shares. The current stake constitutes 10.98% of the company’s outstanding shares. Earlier this year, the shares of the biopharmaceutical company surged after it announced positive efficacy results from its Phase 3 clinical trial of Beloranib in patients with Prader-Willi syndrome (PWS), but much of those gains has faded away gradually. The stock is down by less than 1% since the beginning of the year, partially owing to negative statements on the efficacy of beloranib from a short seller. At the end of January, hedge fund Kerrisdale Capital publicly revealed its short bet on the biopharmaceutical company, claiming that the FDA is not likely to approve Zafgen Inc. (NASDAQ:ZFGN)’s obesity drug. The hedge fund agreed that beloranib has positive effects when it comes to the reduction of body weight, but it claimed that the drug increases the risk of death by four-times. Let us remind you that the FDA put the Investigational NDA for beloranib on partial hold in October after two patients died while being involved in a Phase 3 clinical trial of beloranib. Kerrisdale Capital has a price target of $3 on the stock. It remains to be seen which of the two hedge funds made the right bet on the biopharmaceutical company, but experienced stock options traders could attempt to employ strategies that generate profits on huge upward and downward price movements. Columbus Circle Investors, managed by Clifford G. Fox, sold out of its 36,009-share position in Zafgen Inc. (NASDAQ:ZFGN) during the fourth quarter.

In a newly-amended 13D filing, Ashe Capital Management LP, co-founded by William Crowley, reported owning 10.03 million shares of Allison Transmission Holdings Inc. (NYSE:ALSN), which represent 5.9% of the company’s outstanding shares. This represents an increase from the stake of 9.36 million shares revealed through the fund’s initial 13D filing on the company at the end of October 2015. Most importantly, William Crowley held discussions with Allison’s Chairman at the end of October, requesting the Chairman to “convey to the Board of the Reporting Persons’ request that Mr. Crowley, Co-founder and CEO of Ashe, be appointed to the Board”. However, the latest filing reveals that the company’s Board denied the request and refused to consider the nomination of Ashe’s co-founder for election to the Board. Hence, the investment firm “submitted a notice of intent to nominate Mr. Crowley for election as a director at the 2016 annual meeting of stockholders”, but also revealed three additional proposals that it will make at the meeting, which includes the declassification of the Board. Each director will be up for election annually should that proposal be implemented.

The shares of the manufacturer of transmissions for commercial vehicles and provider of hybrid-propulsion systems for city buses are down by 30% over the past 12 months. Allison Transmission Holdings Inc. (NYSE:ALSN) reported net sales of $1.99 billion for 2015, down from $2.13 billion reported a year earlier. At the same time, the company’s management anticipates its 2016 net sales to decline in the range of 6.5% to 9.5%, citing softening conditions in the North America On-Highway end market. James A. Star’s Longview Asset Management LLC initiated an 8.78 million-share position in Allison Transmission Holdings Inc. (NYSE:ALSN) during the final quarter of 2015.

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