Pershing Square Capital Management’s Bill
Ackman teased his investors, and the media, when he disclosed
he had taken sizable stakes in two new positions but declined
to name the companies. In a 95-page report, the activist
— who craves and invites the spotlight — said
in late 2016 he used 4 percent of his capital to invest in what
he described as a high-quality global business that "generates
predictable, recurring cash flow" and has a "best-in-class
management team." Ackman added that a buying opportunity
materialized due to cyclical and macroeconomic concerns despite
the company’s strong long-term growth potential.
And although Pershing Square has already enjoyed a 22
percent return on the investment through January 24 based on
his average cost for the stock, he believes the investment "is
still attractive" at its current price." Hmm.
Ackman also said in early 2017 he plunked down 9 percent of his
capital on another position. However, this is all he says about
the stock. If Ackman did not take a 5 percent stake in these
stocks, he was not required to file a 13D or 13G within ten
days after passing that threshold. He also does not need to
disclose his quarterly year-end portfolio until February 14,
although he could seek a waiver to delay disclosing individual
positions. Given that these sizable stakes did not trigger a
13D filing, the targets must be large, recognizable names.
Shares of hedge fund favorite Microsoft jumped 2.4 percent, to
close at a new 52-week high of $64.79, after the software and
cloud computing giant reported second-fiscal-quarter results
that came in above expectations. In response, Barclays raised
its price target by a buck, to $71.
"Microsoft is executing well against its plan, growing revenue
while exhibiting expense discipline," the investment bank
states in a note to clients. "Microsoft’s
multi-year journey to become a cloud vendor is finally bearing
fruit. Office revenue is growing and was ahead of consensus
once again." At the end of the third quarter, the stock was the
fourth-most-popular among hedge funds, with at least 209
holders, according to Novus.com. It was the largest U.S. long
ValueAct Capital Management and the second-largest U.S.
stock long of
Eton Park Capital Management and
Adage Capital Partners.
UBS raised its price target on Alphabet’s Class C
shares from $960 to $980 after the parent of search giant
Google reported mostly strong results for the fourth quarter.
In a note to clients, the bank said the report "culminated a
year in which core Google’s advertising business
outran fears of tough comps and the law of the large numbers."
UBS also praised the company’s management. Shares
of Google fell 1 percent, to close at $823.31. The C shares
were the third most widely-held hedge fund stock, with 221
investors at the end of the third quarter, according to
Credit Suisse raised its price target on Alliance Data Systems
from $163 to $174, even though it lowered its estimates for the
marketer of affinity credit cards following the fourth quarter
earnings report. The bank cut earnings estimates mostly due to
a reduced revenue outlook. Credit Suisse raised several
concerns about the company’s credit and growth
trends. However, the higher price target reflects a higher
sum-of-the-parts estimate for the company. Even so, Barclays
cut its price target on the stock from $265 to $255 after
trimming earnings estimates, even though it noted quarterly
results were in line with its expectations. The stock inched up
to close at $222.35. ValueAct Capital is the
company’s second-largest shareholder.