As revealed by a 13D filing, Paul Singer’s Elliott Associates L.P. and its affiliates have combined economic exposure to American Capital Ltd. (NASDAQ:ACAS) of roughly 11.9%. This includes 12.48 million shares of common stock, which account for 4.7% of the company’s outstanding common stock, and additional economic exposure to 7.2% of shares in the form of cash settled swaps with respect to 18.80 million shares. Paul Singer’s investment vehicles had economic exposure to the global asset manager and private equity firm of approximately 10.3% in mid-December 2015, as disclosed by the fund’s most recent 13D filing on the company.
American Capital mainly manages investments in middle market private equity, leveraged finance, real estate, energy and structured products. American Capital Ltd. (NASDAQ:ACAS) had intentions to spinoff one Business Development Company (BDC) last year, but activist Singer was a fierce opponent of the proposed spinoff plans. As a result, the company’s Board conducted a strategic review process and authorized the company to “proceed with soliciting offers to buy the company or its various business lines wholly or partially”. The company’s CEO and Chairman claimed that “our business lines and assets have tremendous value, which is not reflected in our current share price”, so the sale of the company will most likely unlock shareholder value. A total of 36 hedge funds tracked by Insider Monkey had stakes in the company at the end of the third quarter, amassing 33.10% of its shares. Andy Redleaf’s Whitebox Advisors reported owning 7.26 million shares of American Capital Ltd. (NASDAQ:ACAS) through its 13F filing for the September quarter.
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In a Schedule 13D filing, Brad Gerstner’s Altimeter Capital Management LP reported owning 11.50 million shares of United Continental Holdings Inc. (NYSE:UAL), which account for 3.1% of the company’s outstanding common stock. This compares to 9.3 million shares owned at the end of September. The investment firm believed that the company’s shares represented an attractive investment opportunity at the time of purchase. Moreover, Altimeter Capital had discussions with the company’s management, Board of Directors, and Paul Reeder and Edward Shapiro‘s PAR Capital Management, which is another large shareholder of the company, regarding strategies and options to create shareholder value. As a result, Altimeter Capital and PAR Capital might be considered an activist group, one which owns 20.46 million shares of the airline company, which represent 5.5% of its outstanding shares.
The second-largest U.S airline by capacity has seen its shares decline by 35% over the past year, presumably because of declining passenger revenue. The company’s consolidated passenger revenue declined by 2.4% in the first three quarters of 2015 relative to the same period of the prior year, mainly due to a toughening domestic fare environment, strengthening U.S dollar, and reduced travel from corporate customers in the energy sector. Nonetheless, the company’s net income for the first nine months of 2015 totaled $6.5 billion, up from $1.1 billion reported for the same period of 2014. Even more to that, the stock trades at a forward P/E multiple of 5.42, which is notably below the ratio for the S&P 500 Index. It remains to be seen whether the aforementioned activist duo will be successful in creating shareholder value. A total of 70 smart money investors from our system had stakes in the company at the end of September. Cliff Asness’ AQR Capital Management held a 4.10 million-share position in United Continental Holdings Inc. (NYSE:UAL) on September 30.
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