We mentioned in the daily newsletter to Activist Strategy subs this a.m. (you cheapskates won’t see it until tomorrow morning) that ValueAct and Jeff Ubben were taking some Valeant Pharmaceuticals ($VRX) shares off the table - to the tune of 4.2 million. That’s roughly 20% of his VRX position.
Who the hell would fault him? He’s made a cool 60% annualized since going active. A true 10-bagger.
There’s still plenty of smart money in VRX. The pharma company also brought in a new CFO - supposedly an M&A expert with ties to McKinsey (no surprise there). Here’s a paper he co-wrote while at McKinsey.
But now VRX is a true hedge fund hotel.
The other part of what we mentioned in this morning’s newsletter was where would these new funds flow? The two logical options being current positions, Fox ($FOX) and Precision Castparts ($PCP).
The big news with Fox is that Rupert Murdoch is stepping down as CEO (Jeff works fast), so the new consensus is that Ubben will plow that further into Fox. ValueAct went active on Fox back in May and we covered it in Activist Strategy about a month ago.
Using those Valeant funds for Fox would put it as a full position. Making it ValueAct’s new Valeant. And like Valeant, Fox would become a serial acquirer and consolidator of the cable space perhaps? Look out Malone.
Now, Ubben likely won’t be playing in the sub $20 billion market cap range anytime soon, ruling out a number of his positions. His best work is being done in the larger caps. ValueAct’s sweet spot in terms of position sizes is in the $1 billion to $1.5 billion range - Precision Castparts would fit that range if ValueAct puts this new capital to work in the stock.
Note - this is a redacted version that Activist Strategy subscribers received. You can read it all, and more (so much more), by signing up - or in the least, try a free trial. I mean it’s two weeks for free, no obligation, no credit card. With that, Ja Rule said it best, we’re not cocky, just confident.