MSD Capital, the fund managed by Glenn Fuhrman and John Phelan, disclosed yesterday a reduction in its activist stake in DineEquity Inc (NYSE:DIN). According to the latest Schedule 13D form, filed with the SEC, the fund disposed of 200,000 shares and now owns 1.72 million shares of Common Stock, which account for 9.1% of the company’s shares outstanding. This is MSD Capital’s second trim since the end of the second quarter of the year; in early-September, the fund declared having sold 125,000 shares.
MSD Capital is a New York-based investment vehicle owned and controlled by Michael Dell and his family. It was founded in 1998, strictly to manage Mr. Dell’s funds. Currently run by Glenn Fuhrman and John Phelan, the hedge fund engages in a broad array of investments, ranging from publicly traded securities to privately traded companies, and even dabbles in real estate. A key differentiating aspect of the fund is that it maintains a permanent capital base, which allows it to participate in unique transactions with greater flexibility.
According to its latest Schedule 13F filing, its equity portfolio, worth more than half a billion dollars, contains only five publicly traded companies from the services and consumer goods sectors. DineEquity Inc (NYSE:DIN) was its second-largest position as of June 30, 2014, with a market value of more than $163 million. However, the fund has been trimming its stake over the year, and now owns 1.72 million shares of Common Stock, worth about $158 million, down from the 2.05 million shares disclosed by the end of the first half of the year. According to SEC records, MSD Capital has held DineEquity Inc (NYSE:DIN)’s stock since the third quarter of 2008. Despite the fact that the position didn’t change a lot in size over the years, it did gain in value. Since the end of the third quarter of 2008, the stock has returned more than 400% so, as you can figure, it has been a highly profitable long-term investment.
DineEquity Inc (NYSE:DIN) is a $1.73 billion market cap owner and operator of two restaurant concepts: Applebee’s in the bar and grill segment of the casual dining category, and IHOP (International House of Pancakes) in the family dining category of the restaurant industry. The latest of MSD Capital’s stock sales took place amidst a high stock price environment for the company, so one can understand the timing. The stock price was sustained by better-than-expected third quarter financial results, including profit of 99 cents per share, and earnings, adjusted for one-time gains and costs, of $1.14 per share.
However, MSD Capital is not the only one selling DineEquity Inc (NYSE:DIN)’s stock. At least two insiders (a director and an officer) got rid of some shares a couple of days after the earnings report.
Moreover, Mason Hawkins’ Southeastern Asset Management also trimmed its exposure to DineEquity Inc (NYSE:DIN), by 84%, over the second quarter, to 213,000 shares. Nonetheless, Mark Weissman, Adam Cohen And David Coleto’s Caspian Capital Partners augmented its wage over the second quarter, and kept it unchanged over the third one, at 339,923 shares.
Disclosure: Javier Hasse holds no positions in any stocks or funds mentioned
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