Iridian Asset Management was founded in 1996 by David Cohen and Harold Levy who each have investment industry experience of more than 20 years. The fund’s mid-cap investment strategy is to root out under-priced companies which are going through a significant change in corporate structure. The firm also has a small-cap strategy which is based on benefiting from inefficient valuations of the market in these small, lesser-known companies. The firm has assets under management (AUM) of $14.8 billion, with its most recent 13F portfolio for the reporting period of March 31, containing 81 holdings with a market value of $11.87 billion. Cohen and Levy’s favorite tech picks, which we’ll discuss in this article, are SanDisk Corporation (NASDAQ:SNDK), Hewlett-Packard Company (NYSE:HPQ), Seagate Technology PLC (NASDAQ:STX) and AOL, Inc. (NYSE:AOL).
Iridian Asset Management is one of the 700+ hedge funds we are following at Insider Monkey. Our detailed research has shown that small-cap picks of hedge funds perform much better than their large-cap picks. For example, the overall returns of equity hedge funds were just 1.4% in 2014, 11.1% in 2013, and 4.8% in 2012 as compared to the S&P 500 ETF (SPY)’s returns of 13.5% in 2014, 32.3% in 2013, and 16% in 2012. On the other hand, our small-cap hedge fund strategy which mimics the favorite small-cap holdings of hedge funds returned 28.2% in 2014, 53.2% in 2013, and 33.3% in 2012. The cumulative return of our small-cap strategy has been 137% since it was established in August 2012, beating the broader market by over 82 percentage points through the end of March (see the details).
SanDisk Corporation (NASDAQ:SNDK) is one of the technology picks of Iridian Asset Management through a holding that is comprised of 6.35 million shares with a market value of $404.10 million. Iridian added 1.24 million shares of the company to its holding during the first quarter of 2015. The storage devices producer has a market cap of $14.08 billion, a P/E ratio of 20.44 and a dividend yield of 1.80%. SanDisk Corporation (NASDAQ:SNDK) reported revenue of $1.33 billion in the first quarter of 2015, which was 12% less than the prior year period. It also reported net income of $39.02 million, which was significantly less than the year-over-year earnings of $268.95 million. The first quarter 2015 results included an R&D cost of $61 million related to the Fusion-io acquisition as well as restructuring and other charges of $41 million. Michael Lowenstein’s Kensico Capital, along with Rob Citrone’s Discovery Capital Management and Jean-Marie Eveillard’s First Eagle Investment Management are among the other top investors in SanDisk Corporation (NASDAQ:SNDK).
Hewlett-Packard Company (NYSE:HPQ) is next on our list of the top tech stock holdings of Iridian Asset Management. The fund owns 9.65 million shares of the company with a value of $300.73 million, up 6% from the previous quarter. Hewlett-Packard Company (NYSE:HPQ) is planning to divide its business into two separate companies by the end of 2015. One division, HP Inc. will manage the printing and personal systems side of its current business, while the other, HP Enterprise will cover the financial services, software and enterprise services side. Hewlett-Packard Company (NYSE:HPQ) also sold Snapfish, its online photo-printing/storage unit to District Photo in April. Richard Pzena’s Pzena Investment Management, Cliff Asness’ AQR Capital Management and D. E. Shaw are among the major shareholders of HP.
Seagate Technology PLC (NASDAQ:STX) is another storage devices producer in the 13F portfolio of Iridian Asset Management, with the fund owning 4.28 million shares of the company, which have a market value of $222.76 million as of the reporting period. Seagate Technology PLC (NASDAQ:STX) has a P/E ratio of 9.77 and a relatively high dividend yield of 3.60% in comparison with SanDisk Corporation (NASDAQ:SNDK). Fiscal third quarter 2015 revenue for the company was recently reported as $3.33 billion, slightly lower than the revenue of $3.41 billion from the same quarter last year. The company also reported net income of $291 million for the quarter, which was 9% lower than the previous year’s fiscal third quarter. After Iridian Asset Management, Jean-Marie Eveillard’s First Eagle Investment Management held the second largest position in Seagate Technology PLC (NASDAQ:STX) with its investment of 2.80 million shares.
AOL, Inc. (NYSE:AOL) is another top tech pick in the equity portfolio of Iridian Asset Management, the holding being valued at $214.25 million and being comprised of 5.41 million shares. Iridian Asset Management increased its position in the company by 6% during the first quarter of 2015. AOL increased its first quarter revenue to $625.1 million in 2015 from $583.3 million in 2014. AOL, Inc. (NYSE:AOL) achieved strong revenue growth in video, mobile, programmatic and native advertising segments. Yesterday, Verizon Communications Inc. (NYSE:VZ) announced that it will purchase AOL, Inc. (NYSE:AOL) for $4.4 billion, or $50 per share, with the deal expected to be completed this summer. D.E. Shaw and Jean-Marie Eveillard’s First Eagle Investment Management were also major investors of AOL, and stand to benefit greatly from the stock’s nearly 19% pop yesterday.
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