Starboard Cuts Stake in Quantum Corp (QTM), Tiger Global Jettisons Majority of Pure Storage Inc. (PSTG) Holding, Plus 2 Other Moves

Many retail investors seeking to invest in the hedge fund industry may not have the necessary amount of capital to do so, but they can easily track hedge funds’ moves by examining their 13G, 13D, and Form 4 filings, as well as their quarterly 13F filings. The average hedge fund was down by approximately 3% through the end of the first quarter, whereas the S&P 500 gained roughly 1% over the same time span. While it does not seem like monitoring hedge funds’ moves would be a great idea at this point in time, knowing what a specific segment of the hedge fund industry thinks of certain companies can still come in handy for investors. For that reason, the following article will digest four SEC filings submitted by several widely-known hedge fund vehicles, including Starboard Value and Tiger Global Management.

At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

In a freshly-amended 13D filing, Jeffrey Smith’s Starboard Value L.P. reported ownership of 40.55 million shares of Quantum Corp (NYSE:QTM), which constitute 14.2% of the company’s outstanding shares. This represents a decrease from the stake of 42.28 million shares disclosed in Starboard’s previous 13D filing on the company, submitted with the SEC at the end of January. More importantly, the public filing reveals that Mr. Smith’s activist hedge fund exercised its replacement rights in connection with a settlement agreement reached in July 2014, using them to recommend that Clifford Press be appointed to the company’s Board of Directors, after Philip Black, who was appointed to the Board pursuant to the 2014 settlement agreement, stepped down. In a public announcement dated April 5, the expert in scale-out storage, archive and data protection announced the appointment on Mr. Press to the Board. Meanwhile, billionaire Jeffrey Smith is no longer a member of Quantum Corp (NYSE:QTM)’s Board, after having served as a Director from May 2013 through May 2015.

Quantum Corp’s total revenue for the nine months that ended December 31 came in at $355.93 million, which was down from $405.30 million reported for the same period of the prior year. Quantum’s 2015 top-line results reflect a decrease in revenue from branded and original equipment manufacturers (OEM) tape automation systems, media, service and disk backup systems, which was offset by higher revenue from scale-out storage solutions. Shares of Quantum are down by 60% over the past year and are 37% in the red in 2016. There were 14 money managers in our database with stakes in the company at the end of 2015, with them having accumulated almost 26% of its outstanding shares. George Soros’ Soros Fund Management owns a notably smaller stake in Quantum Corp (NYSE:QTM) as of the end of 2015, consisting of 8.85 million shares.

On the next two pages of this article we’ll discuss three separate SEC filings submitted by funds tracked by Insider Monkey.

Tiger Global Management LLC, founded by Chase Coleman, has ceased to own more than 5% of Pure Storage Inc. (NYSE:PSTG)’s common stock, as revealed by a freshly-amended 13G filing. The filing shows that Tiger Global currently owns 1.00 million shares of the data-storage company, which account for 2% of its outstanding shares. This marks a decrease of 4.24 million shares from the position revealed in Tiger Global’s 13F filing for the December quarter. Mr. Coleman’s investment firm revealed that 5.24 million-share stake during the fourth quarter, soon after Pure Storage went public. Tiger Global was invested in the promising all-flash enterprise storage array company before it went public in October 2015. Pure Storage Inc. (NYSE:PSTG) shares are down by 5% since the beginning of 2016, and trade well below their IPO price of $17 per share.

Pure Storage generated total revenue of $440.33 million during fiscal year 2016 that ended January 31, up from only $174.45 million in fiscal year 2015. The company’s management anticipates fiscal year 2017 revenue in the range of $685 million to $725 million, which shows that Pure Storage is indeed growing at a fast pace. Some experts and analysts believe that EMC Corporation (NYSE:EMC) will most likely dominate the all-flash industry, as hard drives continue to be replaced by NAND flash memory devices, a trend widely-known as the “all-flash” movement. However, Pure Storage also appears to be well-positioned to benefit from this trend despite facing high competition in the industry. Brad Gerstner’s Altimeter Capital Management owns 2.00 million shares of Pure Storage Inc. (NYSE:PSTG) as of the end of December.

According to a separate 13G filing, John A. Levin’s Levin Capital Strategies L.P. currently owns 3.07 million shares of Fluidigm Corporation (NASDAQ:FLDM), which make up 10.6% of the company’s common stock. This represents an increase from the stake of 2.83 million shares disclosed in Levin Capital’s initial 13G on the company, filed with the SEC in mid-March. Fluidigm Corporation manufactures and markets innovative technologies and life-science tools focused on the exploration and analysis of single cells and the industrial application of genomics. The company primarily sells instruments and consumables such as integrated fluidic circuits (IFCs), assays and reagents to academic institutions, clinical laboratories, and pharmaceutical, biotechnology, and agricultural biotechnology companies.

Fluidigm’s total revenue for 2015 totaled $114.71 million, compared to $116.46 million in 2014. The decrease was attributable to a decline of $4.9 million in product revenue, which was partly offset by an increase of $3.5 million in service revenue. It is important to note that foreign currency headwinds adversely impacted the company’s 2015 top-line figure by $5.0 million or roughly 15%. The number of money managers tracked by Insider Monkey with stakes in Fluidigm increased to 13 from 11 during the December quarter; those 13 money managers held almost 24% of the company’s outstanding shares at the end of 2015. Samuel Isaly’s OrbiMed Advisors had 2.45 million shares of Fluidigm Corporation (NASDAQ:FLDM) in its equity portfolio at the end of December.

We’ll wrap up this article by discussing the ongoing proxy fight between Willem Mesdag’s Red Mountain Capital Partners LLC and iRobot Corporation (NASDAQ:IRBT). According to a fresh proxy statement, Mr. Mesdag’s investment firm, which owns 1.78 million shares or a 6.15% stake in the robotics company, is seeking support for the election of its director nominees, Mr. Mesdag and Lawrence S. Peiros, at the company’s upcoming annual meeting of shareholders. Red Mountain disclosed a 5.1% position in the company last April, and released a set of proposals that it believed would create shareholder value. Those proposals included: focusing exclusively on the company’s Home Robots business, which would involve the sale of the Defense and Security business and discontinuation of the Remote Presence business; optimizing the capital structure of the core business (i.e. Home Robots); and updating corporate governance policies, among other things. Red Mountain sought the appointment of the aforementioned nominees as part of a settlement proposal, but the robotics manufacturer did not accept it, instead focusing on implementing some of those value-enhancing proposals. Earlier this week, iRobot Corporation (NASDAQ:IRBT) announced that it had sold its Defense and Security business to Arlington Capital Partners for a consideration of up to $45 million.

In the aforementioned proxy statement, Red Mountain urges the shareholders of the robotics company to assist the investment firm in receiving shareholder representation on iRobot’s Board of Directors, saying that Mr. Mesdag and his team “are deeply concerned with the prolonged underperformance of iRobot’s share price”. Moreover, the freshly-submitted SEC filing also says that “Red Mountain has already been a catalyst for positive change at iRobot, but there is much more to be done”. A total of 11 hedge funds in our system had long positions in the company at the end of December and held 9% of its outstanding shares. Steven Cohen’s Point72 Asset Management acquired a new stake of 325,600 shares in iRobot Corporation (NASDAQ:IRBT) during the final quarter of 2015.

Disclosure: None