Corsair Capital Talks REIT Mega-Merger, Voya Financial (VOYA), Olin (OLN), More

Colony Capital Inc. (NYSE:CLNY) is a real estate and financial management company with a market value of $2.1 billion. The company is slated to merge with Northstar Asset Management and Northstar Realty Finance Corp (NYSE:NRF) to create a large, diversified REIT. The stock gained 19% during the second quarter but gave back some of the gains during the third quarter. Corsair Capital expects that the tri-party merger deal will go through and that the combined entity could see substantial gains from a multiple re-rating. Colony Capital Inc. (NYSE:CLNY) is currently trading near its 52-week-high price and has a dividend yield in excess of 8%. Out of the four analysts covering the stock, all of them have rated it as a ‘Buy’. 27 hedge funds that we track held Colony Capital shares worth $271 million as of June 30.

Olin Corporation (NYSE:OLN), which is a major manufacturer of industrial chemicals such as caustic soda and military ammunition, was a hedge fund favorite in Q2, as among the funds that we track, the value of their aggregate positions skyrocketed by 128% to reach $1.29 billion by June’s end. The company’s stock fell sharply after it pre-announced disappointing second-quarter results, due to consumer outages and raw material price pressures.

Despite this negative surprise, Corsair Capital Management remains positive on the stock, as it believes that the chlor-alkali market is on the upswing, with Olin Corporation (NYSE:OLN) set to benefit disproportionately given its large scale. The fund thinks that investors are too focused on short-term raw material pressures and are missing the larger picture. This provides a good risk/reward proposition, making the fund stay invested in the stock. The stock currently trades near the middle of its 52-week price range and has a market capitalization of $3.5 billion. While the stock has performed poorly in the last six months, it has done well in 2016 as a whole, giving a return of over 21% to stockholders. The average analyst recommendation is ‘Overweight’, with an average target price of $24.78 which implies upside of 20%.

Liberty Interactive Group (NASDAQ:QVCA) is a holding company which owns numerous top internet and media properties. The company also sells consumer products through live televised shopping and via its websites such as QVC.com. The company’s stock fell by 21% after it unexpectedly announced that it experienced mid/high single-digit sales declines in the last few weeks of the second quarter and into the third quarter. The company attributed the deceleration in sales to several factors such as an FDA warning regarding a popular hair care product and a challenging promotional retail environment during the spring/summer. However, Liberty CEO Greg Maffei reiterated later in the quarter that there has been no secular change in the business and that he has already seen the “green shoots” that point toward a recovery.

Corsair Capital Management remains bullish on the stock, as Liberty Interactive Group (NASDAQ:QVCA) has repurchased more than 20% of its outstanding shares at ~$26/share and following the second-quarter announcement, has indicated its intention to continue significant repurchases. The company has a market value of more than $14.1 billion and traded around its 52-week-low of $18 just a couple weeks ago. Shares have since gained about 15%. 75 hedge funds that we track held QVCA shares worth $3.81 billion on June 30, compared to 79 funds holding $4.26 billion in shares on March 31.

Disclosure: None