Icahn Cuts Stake In Gannett Co Inc. (GCI), Sandell Gives Up On Ethan Allen Interiors Inc. (ETH), Plus Two Other Moves

Shareholder activism has been surging over the past several years, with the shareholder activism arena managing approximately $120 billion in assets under management. Activist hedge funds are currently able to shake up even the largest companies in the equity market, as investors have been consistently channeling more capital into these investment vehicles. Nonetheless, activists’ returns have not always impressed their investors and other market participants. For instance, the 13D Activist Fund, a mutual fund that provides exposure to shareholder activism, was down by roughly 11% last year, partially owing to its exposure to Bill Ackman’s targets. Even so, the mutual fund has generated an annualized average returns of nearly 14% since the end of 2011, despite suffering a significant loss in 2015. Therefore, activist targets tend to beat the market on average, so individual investors should pay close attention to these investments. With that in mind, the following article discusses three 13D (activist) filings and one 13G (non-activist) filing submitted by widely-known activists and other hedge funds managers.

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According to a newly-amended 13D filing, Jeffrey Smith’s Starboard Value LP currently owns 2.57 million shares of Four Corners Property Trust Inc. (NYSE:FCPT), which account for 6.0% of the company’s outstanding common stock. The reputable activist fund received 3.88 million shares of the real estate investment trust (REIT) in connection with its spinoff from Darden Restaurants Inc. (NYSE:DRI) on November 9, which Jeffrey Smith is the Chairman of. Four Corners Property Trust Inc. (NYSE:FCPT) currently owns 424 restaurants and the majority of them are leased back to Darden Restaurants through triple-net leases with an average initial term of roughly 15 years with stated annual rental payments and options to extend the leases for an additional 15 years. Earlier this month, the company declared two dividends totaling $8.32 per share, which include an $8.12 per share pre-spinoff dividend that represents the company’s estimated share of earnings that had to be distributed for the operating period prior to the spinoff.

According to a separate 13D filing, Carl Icahn’s Icahn Capital LP ceased to be the beneficial owner of more than 5% of Gannett Co Inc. (NYSE:GCI)’s shares as of January 13. The filing discloses an ownership stake of 5.38 million shares in the international news and information company, which account for 4.66% of its outstanding shares. The activist fund reported owning 7.48 million shares of the company through its 13F filing for the September quarter. Gannett Co Inc. (NYSE:GCI)’s operations include 112 daily publications and related digital platforms in the U.S and U.K, including USA TODAY and more than 550 non-daily publications. At the end of June, the separation of Gannett from its former parent company Tegna Inc. (NYSE:TGNA) was completed through a pro rata distribution of 98.5% of Gannett’s outstanding shares.

Gannett mainly generates revenue through advertising and subscriptions to its print and digital publications. Gannett reported operating revenue of $2.15 billion for the first nine months of 2015, down from $2.35 billion reported a year ago. The decrease was mainly attributable to weaker advertising revenues and steadily declining circulations revenue. Nonetheless, the stock has advanced by 19% over the past six months, though it still trades at attractive price-to-earnings ratios, including a forward P/E ratio of only 9.30, which is substantially below the 15.75 ratio for the S&P 500 Index. A total of 17 hedge funds from our database had stakes in the company at the end of the third quarter, amassing nearly 11% of its shares. D.E. Shaw & Co. L.P., founded by David E. Shaw, acquired a 1.11 million-share stake in Gannett Co Inc. (NYSE:GCI) during the third quarter.

In another 13D filing, Thomas E. Sandell’s Sandell Asset Management reported owning 1.31 million shares of Ethan Allen Interiors Inc. (NYSE:ETH), representing 4.6% of the company’s shares. Sandell Asset Manamgenet ceased to beneficially own more than 5% of the company’s common stock on January 11. As stated by Sandell’s latest filings on the company, the activist firm had ownership of over 1.5 million shares, or 5.5%, at the end of November. The recently-filed 13D also outlines that the asset management firm reduced its stake in Ethan Allen Interiors Inc. (NYSE:ETH) as part of an ordinary portfolio re-balancing process. It is widely known that Sandell Asset Management was engaged in a proxy contest with Ethan Allen which sought to elect six new nominees to the company’s Board of Directors during Ethan’s November 24 Annual Meeting. However, the firm ultimately failed to convince shareholders to vote for its slate of Directors and was defeated in the proxy battle.

The shares of the interior design company and manufacturer of home furnishings have declined by 24% since the middle of January 2015, but the company has been undergoing a transformation of its product offerings that might inject new dynamism into its financial and stock performance. The number of smart money investors in our system with positions in the company climbed to 17 from 13 during the third quarter. Royce & Associates, founded by Chuck Royce, cut its stake in Ethan Allen Interiors Inc. (NYSE:ETH) by 6% during the July-to-September period, to 2.89 million shares.

As revealed by a Schedule 13G filing, HealthCor Management L.P., founded by Arthur Cohen and Joseph Healey, currently owns 1.20 million shares of Collegium Pharmaceutical Inc. (NASDAQ:COLL). This denotes an increase of 250,000 shares from the stake revealed through the fund’s 13F for the third quarter. The freshly-upped stake accounts for 5.12% of the company’s outstanding common stock. Earlier this month, the specialty pharmaceutical company conducted a secondary offering of 2.75 million shares of common stock at a price of $20.00 per share. Collegium Pharmaceutical Inc. (NASDAQ:COLL)’s lead product candidate, Xtampza, was granted a tentative approval last year that was subject to an automatic stay of up to 30 months due to a patent litigation filed by Purdue Pharma L.P. in March 2015. Ten smart money investors that we track had positions in the company at the end of the third quarter, stockpiling almost 27% of its shares. Peter Kolchinsky’s RA Capital Management LLC is the largest equity holder of Collegium Pharmaceutical Inc. (NASDAQ:COLL) among those, owning 1.55 million shares as of September 30.

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