Five Noteworthy Moves by Billionaire Israel Englander’s Millennium Management

Millennium Management is a global investment firm founded by Israel Englander in 1989. It employs a global multi-strategy investment approach, and manages more than $207 billion in assets. In its latest 13F filed with the SEC, the fund disclosed that, by the end of the first quarter of 2016, it held long equity positions valued at more than $40 billion and, while the stakes were very diversified, they had a slight focus on finance, information technology, healthcare and consumer discretionary stocks, which accounted for 16%, 14%, 13% and 12% of the equity portfolio, respectively. In this article, we will take a look into Millennium’s most relevant moves during the first quarter – understood as those positions that suffered a change of 25% or more.

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#5 American Electric Power Company Inc (NYSE:AEP)

– Number of shares owned by Millennium Management as of March 31: 3.45 Million

– Value of Millennium Management’s stake as of March 31: $229.7 Million

Let’s start with American Electric Power Company Inc (NYSE:AEP), which, following a 45% reduction in Mr. Englader’s exposure, fell from the fourth spot in his list to the ninth place during the January-March period. Despite the reduction, he remained one of the largest hedge fund shareholders of record, only outranked by Cliff Asness’ AQR Capital Management, which last disclosed ownership of 5.28 million shares of the company, following an 80% increase in its position. Shares of the public utilities company have lost roughly 2% since the second quarter started, mostly on the back of an Ohio Supreme Court ruling in mid-April, which rejected part of a fee the company wanted to impose to customers to support its transition into a competitive power market. Last week, the stock tumbled again on strong U.S. industrial production and homebuilding figures, which led to surging expectations of a rate hike.

#4 Facebook Inc (NASDAQ:FB)

– Number of shares owned by Millennium Management as of March 31: 2.04 Million

– Value of Millennium Management’s stake as of March 31: $233.4 Million

Next up is Facebook Inc (NASDAQ:FB), which also saw Millennium Management trim its exposure, by 42%, during the first quarter. While the stake remained significant in size, it didn’t put Millennium among the top 10 shareholders in our database. In fact, the largest stockholder among the funds that we track was Andreas Halvorsen’s Viking Global, which started a new position comprising more than 20.1 million shares at the end of March. The position, worth almost $2.3 billion, accounted for more than 10% of the fund’s total equity portfolio’s value. Shares of Facebook have gained 13% since the beginning of the year, mostly driven by the company reporting better-than-expected results. For the first quarter, the social media behemoth posted EPS of $0.77 on revenue of $5.38 billion, beating the Street’s consensus by $0.15 and $120 million, respectively. Last week, CEO Mark Zuckerberg met with conservative leaders to address allegations that the site is politically biased. After the conclave, the Wall Street Journal reported that, “session several attendees said [the meeting] was a productive start to a dialogue that should continue.” In a Facebook post, Zuckerberg assured: “I want to do everything I can to make sure our teams uphold the integrity of our products.”

#3 PepsiCo, Inc. (NYSE:PEP)

– Number of shares owned by Millennium Management as of March 31: 2.33 Million

– Value of Millennium Management’s stake as of March 31: $239.4 Million

After Millennium more than tripled its exposure, PepsiCo, Inc. (NYSE:PEP) ascended to the seventh spot in its list of picks for the second quarter. Other funds betting big on PepsiCo included Donald Yacktman’s Yacktman Asset Management, with 13.4 million shares, and Boykin Curry’s Eagle Capital Management, with 8.3 million shares, valued at more than $850 million on March 31. However, since April 1, PepsiCo’s stock has tumbled over 1.8%. The most recent decline seen in the share price was driven by news of Nelson Peltz’s Trian Partners having sold all of its 18.32 million shares of the company over the first quarter, and anxiety regarding the upcoming vote of a proposed sugary drink tax in Philadelphia.

#2 PG&E Corporation (NYSE:PCG)

– Number of shares owned by Millennium Management as of March 31: 5.39 Million

– Value of Millennium Management’s stake as of March 31: $322.1 Million

Over the fourth quarter of 2015, Millennium Management quadrupled its exposure to PG&E Corporation (NYSE:PCG), and further boosted its stake by another 41%, keeping its post as the largest hedge fund shareholder of record, trailed by AQR Capital Management, which declared holding 3.2 million shares and Jim Simons’ Renaissance Technologies, which increased its stake by 285% to 1.68 million shares during the first quarter. Since the beginning of 2016, the stock has advanced by over 12%. PG&E Corporation recently has announced a new annual cash dividend of $1.96 per share of common stock, up 7.7% from the previous $1.82 per share. In addition, the company said it had adopted a new target dividend payout ratio of 55% to 65%, aiming at reaching a payout ratio of roughly 60% by 2019.

#1 Yahoo! Inc. (NASDAQ:YHOO)

– Number of shares owned by Millennium Management as of March 31: 9.73 Million

– Value of Millennium Management’s stake as of March 31: $358.2 Million

Finally, there’s Yahoo! Inc. (NASDAQ:YHOO), which, after a 29% increase in Millennium’s stake, escalated 10 spots and ranked as the second-largest position in terms of value. This stake made Mr. Englander the fifth largest shareholder of Yahoo! in our database, behind Jeffrey Altman’s Owl Creek Asset Management, which last disclosed ownership of more than 15 million shares, and Jeffrey Smith’s Starboard Value LP, which held 12.29 million shares at the end of March. While volatile, shares of Yahoo! Inc. (NASDAQ:YHOO) have gained over 3% since the beginning of April. Just a few weeks ahead of the next round of bids for the core assets of the tech giant, The Wall Street Journal reported that offers are expected to come in between $2 billion and $3 billion, instead of the anticipated $4 billion to $8 billion.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above