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Comcast, Lululemon, EQT and Other New Activist Investments

Quarterly filings provide a window into new allocations made by insurgent fund managers Paul Singer, Glenn Welling, Barry Rosenstein and Keith Meister. Could M&A campaigns be next?
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Activist investors offered up a window into their latest allocations, raising prospects that insurgency campaigns could be next at dozens of new investments, including Comcast Corp. (CMCSA) , Lululemon Athletica Inc. (LULU) and Charter Communications Inc. (CHTR) .

The Deal took a look at the latest quarterly filings issued Tuesday and Wednesday by activist fund managers Paul Singer, Glenn Welling, Barry Rosenstein and Keith Meister. The likelihood that one of these investors engages in an M&A-focused campaign or some other type of share-price improving insurgency in the months to come at some of these investments is pretty high. Each of these investors has on multiple occasions launched proxy battles to install dissident directors in the past—it's possible they could do so again at one of their latest investments to help drive a spike in shareholder value. 

Keith Meister

According to a quarterly securities filing issued Tuesday, activist investor Meister and his Corvex Management acquired a $94 million stake in Comcast in the third quarter of 2017. Corvex also liquidated its positions in FedEx Corp. (FDX) , Regions Financial (RF) and Time Warner (TWX) , which is in the midst of a blockbuster merger with AT&T (T) .

Singer and his fund, Elliott Management LP, acquired new positions in Charter Communications, Gentex Corp. (GNTX) , Gentherm Inc. (THRM) , Investors Bancorp Inc. (ISBC) , Ocean Rig UDW Inc. (ORIG) , Wayfair Inc. (W) and Tenneco Inc. (TEN) . The fund also allocated a new 2.3 million position worth about $115 million in Taubman Centers Inc. (TCO) , where another activist, Jonathan Litt of Land & Buildings Investment Management is engaging in an ongoing battle. 

In an interesting side note, another activist fund, Blue Harbour, has a large investment and collaborative campaign underway at Investors Bancorp as well as a director on the investment firm's board. 

The fund also hiked its stake in NXP Semiconductors Inc. (NXPI) to 16.4 million shares, about $1.8 billion, this quarter, up from 12.3 million shares and a $1.4 billion allocation last quarter. Qualcomm is trying to acquire NXP Semiconductors for $47 billion including debt but Elliott is involved in a "bumpitrage" campaign seeking to have it pay more than its current $110 per share deal. Complicating matters is a $130 billion hostile Broadcom Ltd. (AVGO) bid for Qualcomm. The chipmaker may be incentivized to pay more to buy NXP and close that deal, which could act as a poison pill on Broadcom's bid.

Welling's Engaged Capital acquired new positions in the third quarter at Celestica Inc. (CLS) , Dexcom Inc. (DXCM) , Diebold Nixdorf Inc. (DBD) , Imax Corp. (IMAX) , NCR Corp. (NCR) , Tenet Healthcare Corp. (THC) and Gigamon (GIMO) , which was sold to Elliott's buyout shop division in October for $1.6 billion. Atlantic Investment Management, another activist, has a 7.9% Diebold stake and campaign underway to press the company to consider "strategic alternatives." Sometimes insurgent Mario Gabelli also owns a 7.5% Diebold stake.

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And Rosenstein's Jana Partners LLC acquired new stakes in Lululemon Athletica, Cornerstone OnDemand Inc. (CSOD) , D.R. Horton Inc. (DHI) , Nielsen Holdings plc (NLSN) , Oracle Corp. (ORCL)  and UnitedHealth Group Inc. (UNH) . Both Jana Partners and another major activist, Starboard Value's Jeff Smith accumulated significant positions Jack in the Box Inc. (JACK) this quarter, moves suggesting that the two funds have a razor focus on the fast-food chain's strategic review for its Qdoba Restaurant unit.

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Jana also liquidated positions in Anadarko Petroleum Corp. (APC) , Blackhawk Network Holdings Inc. (HAWK) , Blue Apron Holdings Inc. (APRN) , Cognizant Technology (CTSH) , Hewlett Packard Enterprises (HPE) , CDK Global Inc. (CDK) and a few other companies. Cognizant has been under pressure in recent months by Elliott Management, a large shareholder, to take on more leverage and engage in M&A. CDK in 2016 reached an agreement to add two Elliott Management-backed dissident directors, in a move that raised prospects that the software-maker could sell itself down the road. 

Barry Rosenstein

Comcast and AT&T are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio . Want to be alerted before Cramer buys or sells (CMCSA) or   (T) ? Learn more now.

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