The Morning Brief: Blue Harbour Discloses Newest Activist Position

March 07, 2017   Stephen Taub

The activist manager has taken a big stake in WebMD, saying its shares are undervalued.

Cliff Robbins’s Blue Harbour Group has gone public with a new activist position. The Greenwich, Connecticut hedge fund firm disclosed on Monday it owns more than 3.3 million shares of WebMD Health, or 8.99 percent of the online health care-related content company. This is up from nearly 1.8 million shares held at year-end. Blue Harbour now appears to be the second-largest shareholder in the company.

In a new regulatory filing, Blue Harbour said the shares are undervalued and that it has met or spoken with management in the past and plans to do so again in the future. Otherwise, it does not lay out specific plans, requests or demands. Shares of WebMD, which has a market capitalization of about $1.9 billion, rose about 1 percent, to close at $52.53. This is just slightly above its 52-week low.

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Paul Tudor Jones II’s Tudor BVI Global Fund declined 1.95 percent through the first two months of the year after dropping about 1.2 percent February. This is the newer class of the fund, launched in 1986. The macro fund gained less than 1 percent last year.

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UBS aggressively raised its price target on Netflix — the "N" of the so-called FANG stocks — from $136 to $172, stressing it sees upside to first-quarter subscriber guidance due to momentum in Europe and Latin America and what it describes as modest improvements in Japan.

"Netflix is certainly well-liked and not inexpensive, but we do see the potential for Netflix to exceed Street subscriber growth expectations and believe that concerns regarding competition and content costs are misplaced," UBS tells clients in a note sent on Monday.

At the end of the fourth quarter, the stock was not ranked among the 50 most popular hedge fund stocks. However, it was a big favorite among funds with roots in Julian Robertson Jr.’s Tiger Management. It is the largest U.S. long of SRS Investment Management, the fourth-largest of Tybourne Capital Management, the eighth-largest of Coatue Management, and the tenth-largest of Viking Global Investors. Shares of Netflix Monday rose 2 percent, to close at $141.94.

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Toscafund Asset Management participated in the roughly $101 million funding of Atom Bank, a U.K.-based, mobile-only bank. The London hedge fund firm had previously invested in the company.

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Shares of Valeant Pharmaceuticals International fell another 5 percent, to close at $12.41. The stock is now down nearly 15 percent for the year.


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