Billionaire Ubben Cuts Stake in Adobe (ADBE), Carlson Buys More Archrock (AROC), and 2 Other Moves

There are numerous exceptional money managers who have been able to consistently beat broader market benchmarks, which is just one reason why tracking the moves of elite hedge funds can only be considered wise. Of course, past performance does not guarantee future results, but successful money managers like Ray Dalio and Carl Icahn will most likely keep generating enormous amounts of money. Even if one does not believe in hedge funds’ ability to outperform stock market indexes, he or she should at least track their moves as part of a broader stock analysis process. But how can individual investors track hedge fund moves? One way to explore smart money moves is to look at their quarterly 13F filings, but it is also possible to track their most prominent moves by keeping track of their 13G, 13D and Form 4 filings. Having said that, the following article will examine four such filings submitted by Jeffrey Ubben, Clint Carlson, and other hedge fund managers.

While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

According to a Schedule 13G filing, Ryan Frick’s Dorsal Capital Management LLC owns 3.10 million shares of Infoblox Inc. (NYSE:BLOX), which make up 5.2% of the company’s outstanding common stock. This denotes an increase of 900,000 shares from the position revealed through Dorsal’s 13F filing for the third quarter. The shares of the network-services company have declined by 18% over the past year, so bottom-fishing investors might be inclined to look for entry opportunities at the moment. However, investors should be aware of the fact that the company has suffered losses in each fiscal year since its inception in 1999, save for 2010. Infoblox Inc. (NYSE:BLOX) reported net revenue of $94.0 million for the three-month period that ended October 31, up by 40.9% year-over-year and 8.1% quarter-over-quarter. The exceptional top-line growth enabled the company to tighten its net loss to $1.51 million from $10.21 million a year earlier, and analysts anticipate Infoblox to generate earnings per share of $0.44 for fiscal year 2016. The company invested heavily in growing its business during the quarter that ended October 31, which drove an increase in personnel-related costs (which accounted for a high share of the company’s operating expenses). 24 investment firms from our system had positions in the company at the end of the third quarter, amassing 22% of its shares. Eric Bannasch’s Cadian Capital owned 5.33 million shares of Infoblox Inc. (NYSE:BLOX) at the end of September.

Let’s head to the next pages of this article, where the remaining filings are carefully examined and discussed.

In a Form 4 filing, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, reported acquiring 106,800 shares of BioCryst Pharmaceuticals Inc. (NASDAQ:BCRX) last Thursday and Friday, at prices varying from $6.98 to $7.50 per share. After the recent purchase, the healthcare-focused hedge fund holds an ownership stake of roughly 14.68 million shares. Just recently the Insider Monkey team discussed the fund’s purchase of an additional 344,895 shares of the company. The biotechnology company develops small molecule drugs intended to block key enzymes involved in the pathogenesis of diseases. In October 2015, the company announced the completion of its OPuS-2 trial patient enrollment, which is a clinical trial of orally-administered avoralstat in patients with HAE, and anticipates being ready to reveal the results of this trial in early 2016. Jefferies believes that the upcoming results will disclose higher efficacy than the first clinical results. It should be mentioned that BioCryst Pharmaceuticals Inc. (NASDAQ:BCRX) anticipates filing its NDA for the product candidate in 2018 given that no significant obstacles occur. Reportedly, the company is believed to be a potential acquisition target, which might attract new investor interest should any serious rumors start to circulate. The shares of the biotech company have lost 34% over the past year, which might have forced some hedge funds to sell out of their positions in the company. The number of hedgies from our system with stakes in the company dropped to 14 from 25 during the third quarter. Peter Kolchinsky’s RA Capital Management holds a 1.20 million-share position in BioCryst Pharmaceuticals Inc. (NASDAQ:BCRX) as of September 30.

As revealed by a separate Form 4 filing, Jeffrey Ubben’s ValueAct Holding L.P. sold 2.05 million shares of Adobe Systems Incorporated (NASDAQ:ADBE) last week at a weighted average price of $89.33. Following the recent sizable selloff, ValueAct currently holds an ownership stake of 11.96 million shares. The billionaire investor initiated a stake in the software company at the end of 2011, and has been gradually cashing out of it over the past several months. The shares of Adobe have advanced by 195% since the beginning of 2012, and are up by 18% over the past year alone. The activist investor and his team recognized the company’s potential to monetize its innovative offerings through subscription-based pricing, and Adobe has been able to deliver a much-awaited growth in revenue.  The company’s subscription revenue as a portion of total revenue reached 67% for fiscal year 2015, up from just 50% reported for the prior fiscal year. Hence, Adobe Systems continues its successful transition to a subscription-based model. The company’s total revenue for fiscal year 2015 came in at $4.80 billion, compared to $4.15 billion reported for fiscal year 2014. Similarly, its net income increased by $361.2 million to $629.6 million, thanks to the exceptional top-line growth registered in 2015. Nonetheless, the company believes that there are plenty of opportunities in the digital media market at the moment, so Adobe might have more room to run. Although the stock trades at a rather rich forward price-to-earnings multiple of 22.88, which is higher than the average of 15.38 for the S&P 500 Index, the exceptional growth the company has been experiencing in recent years can justify the high valuation. A total of 42 hedge funds from our system owned the stock at the end of September, stockpiling nearly 10% of the company’s outstanding common stock. Ken Griffin’s Citadel Advisors LLC owns 3.21 million shares of Adobe Systems Incorporated (NASDAQ:ADBE) as of the end of the third quarter.

A separate Form 4 filing revealed that Carlson Capital snapped up 568,041 shares of Archrock Inc. (NYSE:AROC) last week, at prices that ranged from $5.41 to $5.66 per share, boosting its overall holding to 7.68 million shares. In November 2015, the company completed the previously-announced spinoff of its international contract operations, international aftermarket services, and global fabrication businesses into an independent company, named Exterran Corp (NYSE:EXTN). Following the spinoff, the freshly-renamed Archrock continues to operate the former entity’s U.S. contract operations and U.S. aftermarket services businesses. Archrock’s financial performance is highly dependent upon the level of energy industry spending for E&P activities, which serves as the primary explanation for the company’s disappointing stock performance. Archrock Inc. (NYSE:AROC)’s shares have lost 25% over the past one-year period. Its revenue for the third quarter of 2015 reached $2.06 billion, down from $2.11 billion reported for the same period of the prior year.

Disclosure: None