The Morning Brief: Hedge Fund Favorite Autodesk Drops Despite Price Target Hikes

March 06, 2017   Stephen Taub

The stock is a big holding for several hedge fund firms.

Shares of hedge fund favorite Autodesk fell 2.3 percent, to close at $85.32, even after at least two investment banks raised their price targets on Friday, one of them sharply. The maker of 3-D design software reported a fiscal fourth-quarter loss that was larger than the consensus forecast. However, revenues came in higher than expected, although they were down more than 26 percent compared with a year ago.

Even so, Wall Street is upbeat about the stock. For example, Barclays raised its price target from $100 to $105 and maintained its overweight rating, while UBS raised its price target from $71 to $89.

The stock is easily the largest position of Sachem Head Capital Management, accounting for more than 36 percent of its U.S. equity portfolio. Overall, the hedge fund is Autodesk’s third-largest shareholder. Eminence Capital is the fifth-largest shareholder.

In March 2016, Autodesk named three new directors to its board under a settlement reached with Sachem Head and Eminence Capital. One of the three directors was Sachem Head founder Scott Ferguson, who also became a member of the board’s compensation and human resources committee. Last month Ferguson and another individual resigned from the board but agreed to continue until June 2018 its earlier standstill and voting agreement provisions. Meanwhile, the stock is the largest U.S. long holding of Blue Ridge Capital, the eighth-largest shareholder, while Soroban Capital Partners is the ninth-largest shareholder, even after cutting its stake by nearly 40 percent.

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Shares of hedge fund favorite Valeant Pharmaceuticals International fell 5 percent on Friday and are now down to $13.06. Altogether, the stock is down 10 percent for the year.

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Snap, which enjoys a number of hedge fund investors as it was previously a private company, surged another 10.7 percent on its second day of trading, closing at $27.09.

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Dan Loeb’s Third Point Ventures, the venture capital arm of his hedge fund firm, Third Point, participated in the $32.5 million Series D financing of online lender UpStart. In July 2015 the investor had led the $35 million Series C financing.

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Coatue Management participated in the $450 million Series D financing of ofo, described as an urban bicycle sharing platform.


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