The Morning Brief: With Stocks Like RH, Who Needs FANG?

June 26, 2017   Stephen Taub

The upscale home furnishings chain, which counts several hedge funds as shareholders, has been on a tear this year.

So much for the so-called FANG stocks. Shares of RH, also known as Restoration Hardware Holdings, surged about 5 percent on Friday to close at $59.45 after Deutsche Bank raised its rating on the venerable home furnishings company from hold to buy and lifted its price tag from $45 from $66. The stock has now just about doubled this year alone. At the end of the first quarter, Balyasny Asset Management and Millennium Management were among the top-ten shareholders. At year-end, Tiger Global Management, which has sagged and surged from the same internet and media stocks, cleared out its entire position in RH.

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Jeffrey Smith’s Starboard Value liquidated its position in Parexel International, a life sciences consulting firm. Last Tuesday the company agreed to be acquired by Pamplona Capital for $5 billion. Just last month Starboard disclosed it owned 5.7 percent of the shares, stressing they were undervalued. It had been noted in press reports at the time that the company may be working with investment bankers about a possible sale. Starboard said in its May regulatory filing if Parexel "runs a legitimate, robust process to explore strategic alternatives," there would be "significant strategic and financial buyer interest." It was apparently right.

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Valeant Pharmaceuticals International extended its Paulson rally, gaining another 1.9 percent to close at $15.80. The stock is now up 30 percent over the past six trading days and nearly 9 percent for the year. Now the pressure is on new director John Paulson of Paulson and Co. to deliver.

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Point72 Asset Management, Steven Cohen’s family office, disclosed it more than quadrupled its stake in Conn’s to more than 1.6 million shares, or 5.3 percent of the home furnishings chain.


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