Here Are Billionaire Jeff Ubben’s New Positions and Top Bullish Moves

Jeffrey Ubben founded ValueAct Capital in 2000. The California-based hedge fund has recently filed its 13F filing, in which it disclosed its equity portfolio worth $11.02 billion as of the end of June. Mr. Ubben has worked as a managing partner at Richard Blum’s Blum Capital Partners before starting his own hedge fund. In 2013, Ubben got a seat on Microsoft’s board despite having a paltry position. Mr. Ubben also oversees The Posse Foundation, a nonprofit organization that trains student leaders from public high schools to form multicultural teams.

ValueAct’s investment strategy initially was to focus on valuation and quality discipline, but after the financial crisis of 2008, ValueAct started catering for a vast array of metrics like capital allocation, acquisitions, budgeting and compensation. ValueAct generally makes only three to four new investments in a year, and is famous for its long-term vision. It often holds about 15 positions and the average holding period for each position is about three years. In this article, let’s take a look at some stocks, in which ValueAct boosted its position during the second quarter.

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Baker Hughes Incorporated (NYSE:BHI)

– Shares Owned by ValueAct Capital (as of June 30): 38.89 million

– Value of ValueAct Capital’s Holding (as of June 30): $1.75 billion

Jeffrey Ubben’s ValueAct Capital added over 15.63 million shares of the oilfield services company to its equity portfolio during the three-month period from April-June, increasing its hold in the company by 67%. The total position now accounts for a whopping 16% of the hedge fund’s equity portfolio. Earlier this month, Baker Hughes Incorporated (NYSE:BHI) announced rig count for July which stood at 938, 11 units better than a month earlier.  The Texas-based company missed second-quarter earnings estimates, having reported a net loss of $0.90 per share, versus estimates of a loss of $0.68, but revenue of around $2.40 billion, was $80 million above expectations. Shares of Baker Hughes are up by almost 10% so far in 2016. As of the end of the second quarter, Natixis Global Asset Management’s Harris Associates owns over 4.7 million shares of Baker Hughes.

Alliance Data Systems Corporation (NYSE:ADS)

– Shares Owned by ValueAct Capital (as of June 30): 3.29 million

– Value of ValueAct Capital’s Holding (as of June 30): $ 644.17 million

ValueAct Capital boosted its stake in Alliance Data Systems Corporation (NYSE:ADS) by some 2.75 million shares during the second quarter. Last month, the Texas-based provider of royalty and marketing solutions reported second-quarter earnings of $3.68 per share on $1.75 billion revenue, crushing estimates of EPS  of $3.59 on $1.64 billion in revenue. The firm expects to earn $16.85 per share in 2016, versus the consensus estimate of $16.78. Shares of Alliance Data Systems have lost over 22% since the start of the year.  Barry Rosenstein’s JANA Partners owns 675,412 shares of the company as of the end of the second quarter.

We will continue our discussion of ValueAct Capital’s biggest moves of the second quarter on the next page.

Trinity Industries Inc (NYSE:TRN)

– Shares Owned by ValueAct Capital (as of June 30): 6 million

– Value of ValueAct Capital’s Holding (as of June 30): $ 111.42 million

Trinity Industries Inc (NYSE:TRN) represents a new position in ValueAct Capital’s portfolio, as the hedge funds acquired around 4% of the company’s total stock during the June quarter. The Texas-based company posted EPS of $0.62 for the second quarter, which topped the estimates by $0.14, while revenue of $1.18 billion was in line with analysts’ expectations. Trinity Industries stock is down over 1% in 2016. Ric Dillon’s Diamond Hill Capital owns over 1.56 million shares of the company.

Armstrong Flooring Inc (NYSE:AFI)

– Shares Owned by ValueAct Capital (as of June 30): 4.6 million

– Value of ValueAct Capital’s Holding (as of June 30): $77.97 million

ValueAct Capital acquired 4.6 million new shares of Armstrong Flooring, getting over 16% hold of the company’s total shares. The aggregate value of the fund’s fresh stake is about $77.97 million. The Pennsylvania-based flooring solutions company earned $0.56 a share in the second quarter, above the analysts’ forecasts of $0.51, while revenue of $314.3 million surpassed the consensus estimate of $311.65 million. Earlier this month, KeyBanc upgraded Armstrong World Industries to ‘Overweight’ from ‘Sector Weight’ with a price target of $50.

Morgan Stanley (NYSE:MS)

– Shares Owned by ValueAct Capital (as of June 30): 38 million

– Value of ValueAct Capital’s Holding (as of June 30): $ 9.87 million

ValueAct Capital acquired a position in Morgan Stanley (NYSE:MS) during the second quarter, buying 38 million shares of the company, which accounted for 8.96% of the hedge funds’ equity portfolio at the end of June. In a letter to the investors, Jeffrey Ubben said that there has been a considerable amount of time and energy spent “overanalyzing” Morgan Stanley amid regulatory burden on the capital intensive business. Morgan Stanley’s stock has lost around 6% year-to-date. Following stress tests earlier this year, the Federal Reserve ordered Morgan Stanley to submit a new capital plan by the end of the year.