Tom Sandell’s Sandell Asset Management recently filed its 13F with the SEC, disclosing its equity holdings at the end of 2014. The value of the fund’s equity portfolio crested $1.0 billion for the first time at the close of the year, an improvement from the $938 million it held at the end of the third quarter. The activist investor, who has recently been pushing for the sale of SemGroup Corp (NYSE:SEMG), which was just outside his top five picks, has some noteworthy new positions, one of which we’ll examine in this feature.
First up though is Bob Evans Farms Inc (NASDAQ:BOBE), which moves into the top spot after Sandell’s former top pick, Compuware Corporation (NASDAQ:CPWR) was acquired by private equity firm Thoma Bravo LLC in December. Sandell has had similarly themed discussions with Bob Evans’ management, previously declaring that it had been in contact with various firms who had interest in acquiring some of the company’s assets.
Sandell increased his stake in Bob Evans Farms Inc (NASDAQ:BOBE) in the fourth quarter by 7%, to 1.62 million shares, while the company’s largest shareholder among funds we track, Rob Citrone’s Discovery Capital Management, also increased its stake by 10%, to 2.20 million shares. In operation for more than 50 years, Bob Evans provides packaged food for restaurants and convenience stores, as well as providing other support services. Shares of the company are up 15.08% year-to-date.
Brookdale Senior Living, Inc. (NYSE:BKD) was one of Sandell’s new positions during the fourth quarter, as it purchased 1.87 million shares of the real estate provider of residences for seniors. It was the only new position to make Sandell’s top five holdings, and it quickly utilized that new position to push for changes at the company, including a shakeup of the board and the sale of some of its assets (we’ll cover this campaign in greater detail in our first Activist Newsletter, releasing at the end of the month).
Billionaires Larry Robbins and Daniel Och are two major investors of Brookdale Senior Living, Inc. (NYSE:BKD) who could have a say in how a potential proxy fight would unfold. Robbins owned 8.76 million shares at the end of 2014, while Och owned 4.24 million. Shares of Brookdale gained 5% on the news of Sandell’s activist campaign, and are up slightly year-to-date.
Visteon Corp (NYSE:VC) checks in at third, a company that has recently considered splitting itself, which analyst Jim Cramer described at the time as a move that would be great for shareholders, with him considering the sum of the company undervalued in relation to its parts. Shares spiked 5% after the auto parts maker made that announcement.
Sandell has been invested in the company since late 2012, and further increased its exposure to it by 35% in the fourth quarter of 2014. Following the share price spike in early September, Visteon sagged over 20% in the following month, which may have provided the perfect opportunity for Sandell to move on it. Shares have since rebounded by more than 15%. Solus Alternative Asset Management remained the largest Visteon Corp (NYSE:VC) shareholder among funds we track, with 2.08 million shares, despite trimming their exposure by 25% during the fourth quarter.
DIRECTV (NASDAQ:DTV) lands in fourth, and was been a popular choice among the hedge funds we track, as it became a merger arbitrage play following the announcement earlier in the year that AT&T Inc. (NYSE:T) would purchase it for $48.5 billion. 63 funds had a position in the stock, up from 57 at the end of the third quarter, and the funds’ capital investment increased by $1 billion.
Sandell owned 550,600 shares, unchanged from the previous quarter, when it purchased the majority of those after opening the position in the second quarter of 2014. Warren Buffett’s Berkshire Hathway remained the largest shareholder of DIRECTV (NASDAQ:DTV) with 31.53 million shares, while Highfields Capital Management owned 12.14 million shares, an increase of 15% from the end of the previous quarter.
Meritor Inc (NYSE:MTOR) was Sandell’s fifth most valuable holding, the 2.89 million shares it held at the end of the year being worth $43.72 million. Sandell lowered its exposure to Meritor by 15% during the quarter after also lowering it by 16% during the third quarter. That was likely a case of taking some profit from a stock it held since late 2013, which had gained 40% to 50% by the middle of 2014. Meritor is down 4.75% on the year, on guidance of $1.20 to $1.30 in earnings per share, which came in below estimates of $1.34, while revenue was also short of estimates.
The maker of automobile parts, which recently unveiled several new product innovations including the first self-inflating tire system for linehaul tractors, counts billionaires Marc Lasry and Larry Robbins among its largest investors, as the two owned 7.81 million shares and 6.52 million shares respectively.
Disclosure: None
