Senator Investment Group, which is led by former Merrill Lynch colleagues, Douglas Silverman and Alexander Klabin, recently filed its 13F form with the Securities and Exchange Commission. While Silverman brought his expertise in event-driven investing to the table upon the firm’s establishment in 2008, Klabin brought his skills in value investing, distressed debt, and special situations investing. The firm currently has about $11.8 billion in regulatory assets under management, while the market value of its public equity portfolio increased to $11.49 billion by the end of June from $10.42 billion at the end of the previous quarter. The consumer discretionary sector formed the largest proportion of the portfolio at 24%, followed by a 15% contribution from the healthcare sector. Although the fund managers have a knack for seeking out merger arbitrage opportunities, there are some newly initiated companies among the top equity picks that do not fit this bill. These include Macy’s, Inc. (NYSE:M), Host Hotels and Resorts Inc (NYSE:HST), and Citigroup Inc (NYSE:C), which we’ll dig a bit deeper into.
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Coming back to the non-merger arbitrage picks, a Macy’s, Inc. (NYSE:M) position was initiated of some 6.50 million shares valued at $606.92 million during the June quarter. The holding represents about 5.28% of the fund’s portfolio and amasses nearly 2% of the company’s outstanding shares. The stock price of the $21.24 billion retail company has slid by 3.79% year-to-date. JP Morgan recently downgraded Macy’s, Inc. (NYSE:M) to ‘Neutral’ from ‘Overweight’ after the company missed earnings estimates in its financial results for the second quarter. While its watch and jewelry sales continued to slump, the athletic segment strengthened significantly, along with out-performance from other brands, and Macy’s management seems upbeat about the company’s turnaround. Ross Margolies‘ Stelliam Investment Management is one of the prominent shareholders of Macy’s, Inc. (NYSE:M), though it decreased its holding by 2% in the second trimester to 1.23 million shares valued at $82.65 million.
During the second quarter Senator Investment acquired some 18.0 million shares of Host Hotels and Resorts Inc (NYSE:HST) valued at $356.94 million. The holding represents 3.11% of the fund’s portfolio and 2.38% of the company’s outstanding shares. After the $14.53 billion REIT missed the top line estimates while meeting FFO expectations in its second quarter financial results, Credit Suisse downgraded Host Hotels and Resorts Inc (NYSE:HST) to ‘Neutral’ from ‘Outperform’. The firm doesn’t see any near-term catalysts for the company, which it believes ‘will continue to suffer from renovation displacement, softer results in NYC, international overhang and earnings drag from net dispositions’. Jeffrey Furber‘s AEW Capital Management trimmed its holding in Host Hotels and Resorts Inc (NYSE:HST) by 1% during the March-June period, to 6.31 million shares valued at $125.05 million.
Senator Investment initiated a position in Citigroup Inc (NYSE:C) of 4.0 million shares valued at $220.96 million, representing 1.92% of its portfolio. So far this year Citigroup Inc (NYSE:C)’s stock has climbed by about 6.45%, compared to the 4.11% gains for the Global Banks industry during the same period. The $172.37 billion financial services company managed to beat both the top and bottom line estimates in its financial results for the June quarter. Ken Fisher’s Fisher Asset Management increased its stake in Citigroup Inc (NYSE:C) by 1% during the second quarter to 11.83 million shares valued at $653.22 million.
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