At least two investment banks cut their price target on
hedge fund favorite Constellation Brands. UBS reduced its
target from $170 to $162, noting the distributor of liquor and
beer reported third-quarter results that came in below its
expectations for organic growth and cash flow growth. The
investment bank is also concerned about potential tax reform
that could result in higher taxes for imports from Mexico,
which would increase costs.
Credit Suisse cut its target price from $183 to $165, noting
that tax savings enabled the company to beat earnings estimates
even as "the list of risks grows." The bank, which maintained
its neutral rating, notes that investors are worried about the
impact of proposed policy reforms under the incoming Trump
administration, the need for increased investment to sustain
growth, and the performance of Ballast Point, the craft brewer
it bought in late 2015. Credit Suisse also cut its earnings
estimate for this year.
Even so, the stock climbed 1.8 percent on Friday, to close
at $149.44. At the end of the third quarter, the stock was a
favorite among the Tiger crowd. Tiger Cub
Lone Pine Capital was the fourth-largest shareholder, while
Viking Global Investors was the tenth-largest investor.
Among smaller Tiger-related funds, the stock was the largest
long of Valinor Management and the second largest long of Miura
Global Management and Samlyn Capital. In addition,
Constellation is the eighth-largest individual long position of
Melvin Capital Management, which does not have roots in Julian
Tiger Management but rather Steven Cohen’s SAC
Credit Suisse raised its rating on hedge fund favorite
Willis Towers Watson to outperform from neutral and lifted its
price target from $137 to $143. In a note to clients, the bank
says it is confident shares of the consulting firm can recover
much of their 25 percent to 26 percent underperformance
compared with two competitors in 2016. The bank also cites an
"increasing ability" for the company to grow earnings through
share repurchases, which it says "will become more clear as we
get to the back half of 2017."
It does not point out that at least two activist hedge fund
firms are major shareholders and the types of investors that
would aggressively push for buybacks and other stock-enhancing
measures. They include
ValueAct Capital Management, the third-largest shareholder,
JANA Partners. The stock rose 0.65 percent on Friday, to
Adage Capital Partners disclosed it owns 1.35 million
shares of Loxo Oncology, or 5.28 percent of the total shares.
The Boston hedge fund firm made its filing in a 13G, meaning
the investment in the company, which is trying to develop
cancer treatment drugs, is passive.