Shares of Starz (NASDAQ:STRZA) are trading 7.91% higher in the extended-trading session after rumors surfaced of acquisition discussions between it and AMC Networks Inc (NASDAQ:AMCX), as reported by Bloomberg. Let’s find out more about the discussions and uncover hedge funds’ sentiment towards such a deal.
According to the latest reports, AMC Entertainment is said to be in discussions with Starz to acquire the company and this isn’t the first time that AMC has shown interest in it. AMC Networks Inc (NASDAQ:AMCX) backed out from even making a bid for Starz in December of last year, considering the latter to be overvalued at $4 billion at that time. It will be interesting to see how these discussions unfold, as Starz is said to have an enterprise value of $5 billion, along with a market cap that currently sits at $3.9 billion. Shares of the entertainment media company are up by more than 30% this year.
John Malone is the largest shareholder of Starz (NASDAQ:STRZA) and the billionaire investor has talked on multiple occasions about the acquisition talks involving the company, the latest of which involved Lions Gate Entertainment Corp. (USA) (NYSE:LGF). The billionaire investor was able to get a 3.4% stake in Lions Gate Entertainment against an undisclosed stake given to the entertainment company in Starz, and he called a deal between the two a “terrific, synergistic fit”. There wasn’t any official confirmation from either AMC Entertainment Holdings or Starz concerning the merger discussions.
The smart money was slightly bearish on Starz during the second quarter. The aggregate hedge fund holdings in the entertainment company were only up by 15.27% to $825.89 million in spite of a gain of 29.96% in its share price during the quarter, which indicates a sell-off from hedge funds in our database, though the number of hedge funds holding long positions in the company was up by two to 27. Hedge funds in our database owned 18.1% of its outstanding shares on June 30.
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JANA Partners, led by Barry Rosenstein, and Horizon Asset Management, led by Murray Stahl, were among the major shareholders of Starz as of June 30, owning 7.59 million shares and 7.06 million shares, respectively. Napier Park Global Capital led the list of hedge funds initiating new positions in the company, as it add an 85,329-share position valued at $3.82 million to its portfolio. On the other hand, JAT Capital Partners and Madison Street Partners disposed of their entire stake in the entertainment firm during the second quarter. Insiders maintained a bearish outlook on the stock, with at least 54 insider sales in 2015. Christopher Albrecht, CEO of Starz, has sold a total of 341,689 shares of the company in 2015, including sales of 650 shares, 45,291 shares, and 47,855 shares, respectively, at the beginning of September.
The smart money opted to limit their exposure to AMC Networks Inc (NASDAQ:AMCX) during the second quarter, as the number of investors with long positions remained flat at 19, but, amid a 7% growth of the stock, the total value of the holdings of these funds declined to $407.94 million, equal to 6.90% of the company, from $447.30 million a quarter earlier.
Among the hedge funds that we track at Insider Monkey, Mario Gabelli’s GAMCO Investors held 1.61 million shares of the company at the end of June, down by 8% on the quarter. On the other hand, Ken Griffin‘s Citadel Investment Group boosted its investment in the company by 61% to 651,718 shares.
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