Clifton S. Robbins’ Blue Harbour Group has increased its position in Rackspace Hosting Inc. (NYSE:RAX), a new filing with the U.S. Securities and Exchange Commission shows. The activist stake was raised to 11.36 million shares from 9.18 million shares the fund held at the end of the first quarter. According to the filing, Blue Harbour Group’s stake in Rackspace Hosting Inc. (NYSE:RAX) is equivalent to 8.0% of the company’s outstanding common stock. Based in Texas, Rackspace Hosting Inc. (NYSE:RAX) is a managed cloud company with a market cap of $4.3 billion.
Greenwich-based Blue Harbour Group was founded by Clifton S. Robbins in 2004. Previously, Robbins worked at major private equity firms such as KKR & Co, and General Atlantic. Robbins uses a completely collaborative activist approach by working with the management teams of the companies he invests in to build and create shareholder value. At the end of March, Blue Harbour’s public equity portfolio contained $3.3 billion in holdings. As of March 31, the fund had a strong focus on technology and industrial goods stocks, with technology accounting for 36% of its portfolio value.
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Rackspace Hosting Inc. (NYSE:RAX) is a managed cloud company which offers a results-obsessed service known as Fanatical Support to businesses. The company has more than 300,000 customers worldwide, including two-thirds of the companies in the FORTUNE 100. Rackspace Hosting Inc. (NYSE:RAX) posted strong financial results for the second quarter, with its net income jumping to $29.2 million, versus $22.5 million in the same quarter last year. The company reported revenue of $489 million, up from $441.2 million in the second quarter of 2014. Rackspace Hosting Inc. (NYSE:RAX) expects revenue in the third quarter to grow between 2.0% and 3.5%, on a constant currency basis. For the full-year 2015, the company anticipates revenue to grow between 12% and 14%, also on a constant-currency basis.
Despite the seemingly positive results and growth projections, Rackspace Hosting Inc. (NYSE:RAX)’s stock performance has been anything but impressive, with shares of the company having dropped by 37.52% year-to-date. Recently, Karl Pichler, Chief Executive Officer (CEO) of Rackspace Hosting Inc. (NYSE:RAX), unloaded 749 shares of the company at $32.22 per share for an aggregate price of about $24,132. Following the sale, Pichler now owns 87,484 shares of the company.
Last month, Intel Corporation (NASDAQ:INTC) announced a new collaboration with Rackspace Hosting Inc. (NYSE:RAX) as a part of the Intel Cloud for All initiative. Intel and Rackspace will establish the OpenStack Innovation Center to focus on driving enterprise features and scale optimizations into the OpenStack source code, according to a statement by Intel. Rackspace Hosting Inc. (NYSE:RAX) is the co-founder and main operator of open source cloud software platform OpenStack. The OpenStack Innovation Center will include the world’s largest OpenStack developer cloud, consisting of two 1,000-node clusters that will be available to the OpenStack community-at-large to support advanced, large-scale testing of OpenStack performance, code and new features. These testing clusters are expected to be available within the next six months.
At the end of last month, Rackspace Hosting Inc. (NYSE:RAX) announced that it was positioned by Gartner Inc. in the Leaders quadrant of “Magic Quadrant for Cloud-Enabled Managed Hosting” in both North America and Europe. Rackspace Hosting Inc. (NYSE:RAX) was among the 19 providers assessed by Gartner. The company was one of two in the Leaders quadrant in North America, and it was one of seven in the Leaders quadrant in Europe.
Among investors we track is Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, which held 377,723 Rackspace Hosting Inc. (NYSE:RAX) shares as of June 30, the majority of which were purchased during the second quarter.
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