Luxor Capital Group Scored Big Last Year; Here’s Where It’s Headed Next

In Ally Financial Inc (NYSE:ALLY), Luxor Capital has been holding shares since 2016, but during the first three months of 2018 it more than doubled the stake to 4.11 million shares valued at $111.46 million. Ally Financial Inc (NYSE:ALLY) is a digital financial services company with assets of around $170 billion and it stands to benefit immensely from the recent rollback of regulations. One of the items on the new bill is raising the asset threshold above which banks are subjected to tough federal regulations to $250 billion from $50 billion. The raised threshold allows Ally Financial Inc (NYSE:ALLY) to escape the yearly stress tests and scrutiny that mandates them to keep extra cash and it will be able to raise dividends or buy back stock without the go-ahead from the Fed. Ally Financial also received another boost from the government last month, when the House and Congress voted to scrap a policy installed in 2013 by the Consumer Financial Protection Bureau to prevent auto lenders from charging minorities higher rates for auto loans. The new legislation helps auto lenders like Ally Financial Inc (NYSE:ALLY) by allowing it to charge higher fees.

Extended Stay America Inc (NYSE:STAY) represents a new position in the fund’s equity portfolio as it acquired 5.14 million shares worth $107.05 million. The stock of Extended Stay America Inc (NYSE:STAY) has appreciated by 15% since the beginning of the year amid better-than-expected EPS and revenue for the last two reported quarters and portfolio revamping. Last year, the company launched a plan to dispose of some undeperforming properties and sold five properties for $77 million. So far this year, it sold 25 properties with 2,400 rooms to Three Wall Capital for $114 million in February. Under the terms of the agreement, Extended Stay America will continue to manage these properties over a period of 20 years. Three Wall Capital will build 15 additional ESA hotels over the next seven years. In March, Extended Stay America Inc (NYSE:STAY) also sold a hotel in Texas for $44.8 million. Overall, the plan involves selling 150 properties by 2021 and by the end of the year it plans to sell 45 more hotels.

During the first quarter, Luxor boosted its stake in Amazon.com, Inc. (NASDAQ:AMZN) by some 47,200 shares, having amassed around 70,000 shares valued at $101.35 million. Amazon.con, Inc. (NASDAQ:AMZN) continues to build momentum in most areas it operates in. According to Mary Meeker, a partner at Kleiner Perkins Caufield & Byers, who presented her internet trends report for the Code Conference, Amazon.com, Inc. (NASDAQ:AMZN) continues to dominate the US eCommerce space with a market share of 28%. Overall, eCommerce sales advanced by 16% last year, up from a 14% growth in 2016. The tech behemoth is also enjoying strong success in the smart speaker segment, with the Amazon Echo installed base growing to over 30 million in the last three months of 2017 from 20 million a quarter earlier. However, in the first quarter of 2018, Amazon Echo sales were surpassed by Alphabet Inc (NASDAQ:GOOGL)’s Google Home, according to a Canalys report. Google shipped 3.2 million Home and Home Mini devices versus 2.5 million Echo devices shipped by Amazon.com, Inc. (NASDAQ:AMZN).

Autodesk, Inc. (NASDAQ:ADSK) is another new position in Luxor Capital Management’s equity portfolio, with the fund holding almost 571,800 shares worth $71.80 million. At the end of May, Autodesk, Inc. (NASDAQ:ADSK) reported its first-quarter results, which showed revenue grow by 15.3% on the year to $559.90 million. It was the first quarter of double-digit revenue growth since 2015. In addition, the revenue was $2.50 million higher than anticipated, while EPS of $0.06 topped the consensus estimate of $0.03. For the current quarter, Autodesk, Inc. (NASDAQ:ADSK) expects revenue between $595 million and $605 million and EPS between $0.13 and $0.16, versus consensus estimates of $598.50 million and $0.18, respectively.

Last but not least, Facebook, Inc. (NASDAQ:FB) was also added to Luxor’s equity portfolio, with the fund disclosing a $34.36 million position that contains 215,000 shares. Earlier this month, Facebook, Inc. (NASDAQ:FB) has been the subject of a note by KeyBanc analyst Andy Hargreaves, who wrote that by 2020 the primary growth driver for Facebook, Inc. (NASDAQ:FB) will be Instagram. Hargreaves estimates that Instagram will generate 27% of Facebook’s incremental add revenue this year, but this figure will growth to 58% by 2020. He also forecasts that Instagram will have over 1.40 billion monthly active users and revenue of more than $22 billion.

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