Hudson Bay Capital Management Betting Big on Mergers in Q2

#3 Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT)

 – Shares held by Hudson Bay Capital Management (as of March 31): 1.00 million

 – Value of Holding (as of March 31): $79.80 million

Moving on, Hudson Bay Capital upped its stake in Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT) by a whopping 264% during the first quarter. Like the two stocks already discussed, Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT) is also a merger arbitrage play of the fund. Last month, Starwood and Marriott International Inc (NASDAQ:MAR) announced that the shareholders of both companies had officially approved their merger. The development came a week after China-based Anbang Insurance Group, which was also in the mix to acquire Starwood, withdrew its bid. On May 12, Starwood completed the sale of its timeshare business, Vistana Signature Experiences, to Interval Leisure Group, Inc. (NASDAQ:IILG). For the first quarter, Starwood reported EPS of $0.70 on revenue of $1.40 billion, beating analysts’ expectations of EPS of $0.58 on revenue of $1.34 billion.

#2 Yahoo! Inc. (NASDAQ:YHOO)

 – Shares held by Hudson Bay Capital Management (as of March 31): 2.57 million

 – Value of Holding (as of March 31): $94.44 million

Amid a 10.67% rise in Yahoo! Inc. (NASDAQ:YHOO)’s stock during the first quarter, Hudson Bay Capital Management increased its stake in the company by 237%.  Earlier this year, Yahoo! Inc. (NASDAQ:YHOO) agreed to sell its core business after continuous pressure from activist investor Jeffrey Smith of Starboard Value. In March, Starboard launched a proxy fight to overthrow the entire board of Yahoo, which lasted until April 27 when the company agreed to give four board seats to the fund, including one to Mr. Smith. According to recent reports, Yahoo is currently in the process of narrowing down the more than ten bids it has received for its core business. At the end of 2015, Starboard Value owned 7.1 million shares of Yahoo worth $236.27 million.

#1 Alibaba Group Holding Ltd (NYSE:BABA)

 – Shares held by Hudson Bay Capital Management (as of March 31): 1.71 million

 – Value of Holding (as of March 31): $134.98 million

With Hudson Bay Capital Management making a four-fold increase to its stake in Alibaba Group Holding Ltd (NYSE:BABA) during the first quarter, the company emerged as the fund’s top stock pick at the end of that period. Amid a slump in Chinese equities at the beginning of 2016, Alibaba Group Holding Ltd (NYSE:BABA)’s stock also plummeted heavily. However, it has recovered most of those losses in the last three months and is currently trading down by 4.4% year-to-date. The company reported its fourth quarter of fiscal year 2016 earnings last week, declaring EPS of $0.47 on revenue of $3.75 billion, which missed earnings estimates by $0.08 but topped revenue estimates by $$180 million. On May 12, Alibaba and SoftBank announced that they have established a joint venture, SB Cloud Corporation, which will launch cloud computing services in Japan. Another fund that increased its stake in the company significantly during the first quarter was Hari Hariharan‘s NWI Management, which lifted its holding by 167% to 708,500 shares.

Disclosure: None