A new filing with the U.S. Securities and Exchange Commission disclosed that Msci Inc (NYSE:MSCI) entered into a cooperation agreement with Jeffrey Ubben’s ValueAct Capital to appoint three new members to its board of directors. Msci Inc (NYSE:MSCI) has agreed to appoint D. Robert Hale, a partner at ValueAct Capital, as well as Wendy E. Lane and Wayne Edmunds to the company’s board. ValueAct Capital is one of the largest shareholders of the company. According to the filing, the fund owns around 9.31 million shares, equal to 8.3% of the company’s common stock outstanding.
San Francisco-based ValueAct Capital is a 14-year old activist hedge fund with net annual gains of 17 percent. Founded by Jeff Ubben, the hedge fund has $14 billion under management. Mr. Ubben is a former managing partner of Richard Blum’s Blum Capital Partners. ValueAct Capital has a long-term focus, taking very concentrated positions and holding on to them for several years. In the October issue of Insider Monkey’s monthly newsletter we analyzed the performance of Ubben’s stock picks that are disclosed in 13F filings. Our analysis revealed that imitating Ubben’s positions would have outperformed the market by nearly a percentage point per month. The results were even better between 2008 and 2012. Ubben stock picks outperformed the S&P 500 index by nearly 1.5 percentage points per month. There are very few fund managers who demonstrated similar talent in beating the market. That’s why we closely track Ubben’s stock moves. Jeff Ubben actively seeks for changes to put companies in the right direction. He usually pursues representation on the companies’ boards. Over the last years, the fund’s representatives were appointed to over 25 companies, including Microsoft Corporation (NASDAQ:MSFT) and Valeant Pharmaceuticals Intl Inc (NYSE:VRX) among others.
Three largest holdings of ValueAct Capital include Microsoft Corporation (NASDAQ:MSFT), Valeant Pharmaceuticals Intl Inc (NYSE:VRX), and Motorola Solutions Inc (NYSE:MSI). As of the end of the third quarter of 2014, the fund held 74.24 million shares of Microsoft Corporation (NASDAQ:MSFT), 18.92 million shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX), and 28.91 million shares of Motorola Solutions Inc (NYSE:MSI).
Under the agreement, Msci Inc (NYSE:MSCI) will appoint Mr. Hale to the company’s board for election to the board at the company’s 2015 annual meeting of shareholders. The company has agreed to appoint Ms. Lane and Mr. Edmunds as independent members. At the same time, ValueAct has agreed to vote in favor of the company’s nominees to the board at the 2015 annual meeting. In addition, ValueAct has agreed that it will not acquire any beneficial or other ownership interest of 14.9% or more of the company’s common stock outstanding at such time.
In the beginning of last month, ValueAct Capital disclosed a letter it sent to the Lead Director of Msci Inc (NYSE:MSCI) Rodolphe M. Vallee. In the letter, Mr. Ubben expressed his frustration with the board not proceeding with the fund’s request to appoint their representatives. The investor mentioned that the company’s Risk Management Analytics and Portfolio Management Analytics segments have a great potential and strong competitive positions, but they have not show a significant market share growth. According to letter, the investors’ questions have not been answered clearly neither in the publicly disclosed information, not in the discussions with the management, which made the investor consider seeking representation on the company’s board.
Recently, ValueAct Capital disclosed a new stake in the $25 billion oilfield services company Baker Hughes Incorporated (NYSE:BHI). ValueAct reported holding an activist stake amassing 21.95 million shares of the company, representing 5.1% of the outstanding common stock.
Msci Inc (NYSE:MSCI) is engaged in providing investment decision support tools, including indices, portfolio risk and performance analytics and corporate governance products and services. The company has a market cap of nearly $6 billion, and pays an annual dividend of $0.72, on a yield of 1.35. Msci Inc (NYSE:MSCI) stock moved up more than 24% over the year. Currently, the stock trades at $53.48. Analysts have the consensus average target price of $51.75 for the stock, while the consensus average recommendation is ‘HOLD.’
Among the largest shareholders of Msci Inc (NYSE:MSCI) is Generation Investment Management, led by David Blood and Al Gore, which reported holding 9.85 million shares of the company at the end of September 2014. Another investor Stockbridge Partners, run by Sharlyn C. Heslam, disclosed ownership of 2.66 million shares of the company.
Disclosure: none
