Swedish-Born Tom Sandell Focuses on Equity Special Events Opportunities

Sandell Asset Management Corporation is a New York-based alternative asset management firm that predominantly focuses on equity special events and credit opportunities. The asset manager, founded by Thomas Sandell in 1998, seeks to find fundamentally attractive hard-catalyst corporate events at companies across the globe. While Mr. Sandell, born and raised in Sweden, may seem uncommonly quiet for an activist investor, his New York-based hedge fund has also engaged in numerous activist campaigns in recent years. Sandell Asset Management had an equity portfolio worth $420.98 million at the end of March, up from the $362.61 million figure recorded at the end of the December quarter. Leaving these figures aside, let’s have an in-depth look at Sandell’s top five equity holdings as of the end of the March quarter.

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#5. Baxalta Inc. (NYSE:BXLT)

– Number of shares owned by Sandell as of March 31: 499,070

– Value of Sandell’s holding as of March 31: $20.16 Million

The New York-based asset manager acquired a new stake of 499,070 shares of Baxalta Inc. (NYSE:BXLT) during the January-March period, which was worth $20.16 million at the end of the quarter. In January 2016, the U.S. drugmaker sealed an agreement with Shire PLC (ADR) (NASDAQ:SHPG) under which the Dublin-based company will acquire the former to create a leader in the treatment of rare diseases. Under the terms of the January agreement, Baxalta shareholders will receive $18.00 in cash and 0.1482 American Depository Shares (ADSs) of Shire for each Baxalta share at closing. The shareholders of the two companies will vote on the proposed merger on May 27, with the transaction being anticipated to close in early June. Shire officials recently assured the market that the new regulations imposed by the U.S. government to curb tax inversions would not hamper the $32 billion merger. Daniel S. Och’s OZ Management added a 14.43 million-share stake in Baxalta Inc. (NYSE:BXLT) to its portfolio during the March quarter.

#4. Cablevision Systems Corporation (NYSE:CVC)

– Number of shares owned by Sandell as of March 31: 622,500

– Value of Sandell’s holding as of March 31: $20.54 Million

Sandell Asset Management upped its existing position in Cablevision Systems Corporation (NYSE:CVC) by 158,900 shares, or roughly 34%, during the first quarter of 2016 to 622,500 shares. The increased stake was worth $20.54 million at the end of March and accounted for 4.9% of the hedge fund’s portfolio. In September 2016, Cablevision agreed to be acquired by European cable company Altice N.V. in a $17.7 billion deal that could create the fourth-largest cable provider in the United States. Under the terms of the agreement, Cablevision shareholders would receive $34.90 in cash for each share of Cablevision. The multi-billion-merger between Cablevision and the Dutch company was initially anticipated to close during the second quarter of 2016. Cablevision shares have advanced 8% since the beginning of 2016 and trade slightly below the $34.90 acquisition price, which suggests most investors anticipate the deal to go through successfully. Jim Simons’ Renaissance Technologies owns 5.55 million shares of Cablevision Systems Corporation (NYSE:CVC) as of March 31.

#3. Starwood Hotels & Resorts Worldwide Inc. (NYSE:HOT)

– Number of shares owned by Sandell as of March 31: 310,800

– Value of Sandell’s holding as of March 31: $25.93 Million

Sandell’s alternative asset management firm also added a 310,800-share position in Starwood Hotels & Resorts Worldwide Inc. (NYSE:HOT) to his portfolio during the first quarter of the year, which was valued at $25.93 million on March 31. The brand new position constituted 6.2% of Sandell’s $421 million-portfolio. In November 2015, Starwood and Marriott International Inc. (NASDAQ:MAR) sealed a merger agreement, which could create the largest hotel operator in the world based on room count. At closing, Starwood shareholders are set to receive 0.80 Marriott shares and $21.00 in cash for each share of Starwood. At current prices, each Starwood share would be worth $73.6, slightly below Starwood’s current price level. However, several hotel owners in Chicago and New York, namely the owner of Sheraton Grand Chicago and the owner of the Westin Times Square in New York, are challenging Marriott’s acquisition of Starwood in court, arguing that the merger would hurt their businesses. Daniel S. Och’s OZ Management reported owning 5.58 million shares of Starwood Hotels & Resorts Worldwide Inc. (NYSE:HOT) in its latest 13F.

#2. Yahoo! Inc. (NASDAQ:YHOO)

– Number of shares owned by Sandell as of March 31: 894,556

– Value of Sandell’s holding as of March 31: $32.93 Million

Tom Sandell and his team increased exposure to Yahoo! Inc. (NASDAQ:YHOO) by 506,000 shares during the first three months of 2016, ending the first quarter with 894,556 shares valued at $32.93 million. The updated stake accounted for 7.8% of Sandell’s entire portfolio on March 31. Yahoo!’s revenue for the first quarter of 2016 declined 11% year-on-year to $1.09 billion, partly owing to a significant decline in search revenue driven by a drop in Yahoo search traffic. The top-line figure was also impacted by an agreement with Mozilla Corporation reached in November 2014 to compensate Mozilla for making Yahoo! the default search provider in the United States. It appears that Yahoo! is having a hard time turning its business around, so a much-discussed sale of its Internet business seems imminent. The sale is imminent mainly because the strategic review committee formed earlier this year to explore strategic alternatives, which include a sale or a reverse spin-off of the company’s operating business, was recently joined by activist investor Jeffrey Smith of Starboard Value LP. The activist hedge fund owns 12.30 million shares of Yahoo! Inc. (NASDAQ:YHOO) as of March 31.

#1. Bob Evans Farms Inc. (NASDAQ:BOBE)

– Number of shares owned by Sandell as of March 31: 1.38 Million

– Value of Sandell’s holding as of March 31: $64.32 Million

Bob Evans Farms Inc. (NASDAQ:BOBE) was the largest equity holding in Sandell’s portfolio at the end of the March quarter, amassing 15.3% of the fund’s portfolio value. The New York-based asset manager trimmed its stake in Bob Evans Farms by 27,844 shares during the first quarter to 1.38 million shares, which were valued at $64.32 million on March 31. Sandell Asset Management has been pressuring the chain of 548 full-services Bob Evans restaurants to separate the packaged-foods units from the restaurant-chain business, but the fund’s desire hasn’t been fulfilled just yet. Thomas Sandell received four seats of the 12-member Board in August 2014, but the overhauled Board did not go for Mr. Sandell’s separation idea. Nonetheless, the revamped Board has undertaken various steps favored by the activist investor, which included the appointment of a new Chief Executive Officer, as well as an increase of stock buybacks and dividend payments. Shares of Bob Evans Farms have advanced 17% since the beginning of 2016. Rob Citrone’s Discovery Capital Management was the owner of 1.82 million shares of Bob Evans Farms Inc. (NASDAQ:BOBE) at the end of March.

Disclosure: None