Clifton S. Robbins’ Blue Harbour Group has revealed within a Schedule 13D filing that it owns 4.69 million shares in AGCO Corporation (NYSE:AGCO), which represent 5.3% of the company’s outstanding common shares. The hedge fund increased its overall position in the American agricultural equipment manufacturer by 853,231 shares since its most recently-submitted 13F filing.
Following activist funds like Blue Harbour Group is important because it is a very specific and focused strategy in which the investor doesn’t have to wait for catalysts to realize gains in the holding. A fund like Blue Harbour Group can simply create its own catalysts by pushing for them through negotiations with the company’s management and directors. In recent years, the average returns of activists’ hedge funds has been much higher than the returns of an average hedge fund. Furthermore, we believe do-it-yourself investors have an advantage over activist hedge fund investors because they don’t have to pay 2% of their assets and 20% of their gains every year to compensate hedge fund managers. We have found through extensive research that the top small-cap picks of hedge funds are also capable of generating high returns and built a system around this premise. In the 32 months since our small-cap strategy was launched it has returned over 142% and beaten the S&P 500 ETF (SPY) by more than 83 percentage points (read more details). Soon, we’ll be releasing a new quarterly newsletter written by former activist hedge fund analyst Michael Bland that tracks ten or so activist campaigns at any given time.
Follow Clifton S. Robbins's Blue Harbour Group
Blue Harbour Group is a Greenwich-based hedge fund firm founded by atypical activist investor, Clifton S. Robbins, in 2004. Clifton Robbins, who currently acts as the CEO of the fund, formerly worked at major private equity firms such as KKR & Co, and General Atlantic. Unlike most of his confrontational activist peers in the industry, Clifton Robbins employs a completely collaborative activist approach by working with the management teams of the companies he invests in to build and create shareholder value. The investing approach of the multi-billion dollar investment firm has been quite successful thus far, which is evidenced by its annualized returns of 8.9% since its inception. As stated by the fund’s most recent 13F filing, Clifton S. Robbins’ investment team manages a public equity portfolio worth $3.31 billion, while its top ten holdings represent 76.84% of the entire portfolio. In the meantime, Blue Harbour Group’s largest holdings include Rackspace Hosting Inc. (NYSE:RAX) and Akamai Technologies Inc. (NASDAQ:AKAM).
We’ll start off by discussing the main activities of AGCO Corporation (NYSE:AGCO) and its future growth potential. AGCO is the largest agricultural manufacturer of machinery and equipment in the world. The company mainly produces and markets a portfolio of tractors, combines, hay tools, sprayers, and forage and tillage equipment in more than 140 countries worldwide. The shares of AGCO have grown by over 18% since the beginning of the current year and there are no signs that the stock will stop rising any time soon. Just recently, AGCO announced the launch of its first Future Farm and Learning Center in Africa. AGCO’s Future Farm is aimed at supporting sustainable food production systems and enhancing farm output by making more efficient use of agricultural resources. It is expected that Africa’s population will increase to two billion by 2050, therefore, the need for inclusive, sustainable mechanization and training will become greater in the area with the passage of time. Indeed, mechanization is the crucial element in enhancing agricultural productivity on the continent and AGCO can provide this mechanization. It seems that the company will not only have a positive impact on the local communities by providing employment and training, but will also unlock a large revenue stream for itself. The newly-initiated project on the African continent also aims to build new products for this region, support its current products , and satisfy its potential local customers through the company’s new logistics center in Johannesburg. Ultimately, the Future Farm project marks a big step towards a new future for AGCO, which will definitely assist its growth and development in the upcoming years.
Moving on to AGCO’s recent financial performance, we can clearly affirm that the company has been quite successful in delivering satisfactory financial results lately. Despite facing a weaker market demand and a stronger U.S. dollar, AGCO posted adjusted earnings per share of $0.43 that significantly outperformed the Zacks Consensus Estimate of $0.20. Nevertheless, the company reported revenues of $1.7 billion for the first quarter of 2015, which marks a decrease of 27% year-over-year. At the same time, the revenues figure didn’t meet the Zacks Consensus Estimate of $1.8 billion. The main reason behind this disappointing figure was the currency exchange rates; the currency translation decreased the net sales figure by 11.7%. Another figure from the company’s financial reports that is worth taking a look at is the selling, and general and administrative expenses. During the most recent quarter, those expenses came to $211 million, decreasing 21% year-over-year, which might signal that the company has become more operationally efficient. Robbins continues to be the largest shareholder of the company in our database, followed by Martin Whitman‘s Third Avenue Management, and Robert Rodriguez and Steven Romick‘s First Pacific Advisors.
Disclosure: None
