The Morning Brief: Soroban Hits the Bottle Again

March 02, 2017   Stephen Taub


Soroban Capital Partners is bullish on booze. The New York hedge fund firm disclosed that as of February 17 it owned 11.14 million shares of Constellation Brands, or 6.5 percent of the company known for its wine, spirits and beer brands. It did not own any shares of the company in the fourth quarter. At the end of December, its largest U.S. long position was a stake in beer giant Anheuser-Busch Inbev, valued at more than $1 billion. It also held call options on the shares. Last year the Soroban Master Fund was up 4.67 percent after posting a 1.3 percent loss the previous year.

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Third Point sold a little more than 5.9 million shares of Baxter International on February 28 in a block trade for $50.35 a share. This reduced the multi-strategy firm’s stake in the medical device company to 46 million shares, or 8.5 percent of the total outstanding. In a regulatory filing, the hedge fund firm headed by Dan Loeb explained that the decision to sell the shares "was a result of portfolio management discussions," noting the stock "had approached concentration limit guidelines" due to significant appreciation in the stock since its original investment.

Third Point added that it does not plan to sell additional shares for at least 90 days, but wouldn’t rule out the possibility due to performance or market conditions in general. It also said it is "pleased with the performance" of Baxter’s CEO and confident in his ability to continue to create value for shareholders. At year-end, Baxter was by far Third Point’s largest long position in its U.S. stock portfolio, accounting for more than 22 percent of those assets. Shares of Baxter are up more than 15 percent this year alone.

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UBS raised its price target on hedge fund favorite Salesforce.com from $104 to $109 after the cloud computing company reported strong fourth-quarter results. The investment bank referred to the earnings report as a "sizable beat" of expectations. While UBS acknowledged the company’s lower guidance for first quarter billings, the bank says its 2017 outlook remains positive, calling Salesforce "the clear Cloud leader in a growing CRM (customer relationship management) market."

At the end of the fourth quarter, Salesforce was the sixth largest U.S. long of Corvex Management, the seventh largest long of SRS Investment Management and the eighth largest long of Sachem Head Capital Management and Tybourne Capital Management. Shares of Salesforce jumped 3 percent Wednesday to close at $83.81.

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It’s now starting to get ugly again for Valeant Pharmaceuticals International. Shares of the embattled drug company plunged 5.5 percent to $13.59 on Wednesday, a day when the overall market had surged nearly 1.5 percent. The stock is now down nearly 19 percent in the past two days.

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BlueMountain Capital Management more than halved its stake in CF Corp., to a little less than 3.4 million shares, or 4.9 percent of the total outstanding. CF, a blank check company formed by executives of Blackstone Group and Fidelity National Financial (FNF), went public last May.


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