Many leading funds filed forms 13-D and 13-G (and form 4) with the SEC on Monday, including JPMorgan Chase & Co., Lazard Investment Management, and Royce & Co., indicating that they had amended their ownership in U.S. traded public companies. The forms are required to be filed within ten days, so the institutions traded these shares sometime at or after the end of last year.
Also, we have included, when applicable, SEC Form 4 filings by Institutions that are considered corporate insiders by virtue of their holding more than 10% ownership, and in many cases having representation on the Board of Directors. The following are the most notable filings on Monday:
Zynga Inc (ZNGA) develops, markets and operates online social games such as CityVille, FarmVille, FrontierVille, and others, making them available worldwide on various platforms, including Facebook, MySpace, and Yahoo, as well as the iPad, iPhone, and Android devices. On Monday, JPMorgan Chase & Co. (JPM) filed SEC Form SC 13G indicating that it holds a passive stake of 6.7 million shares in the company.
ZNGA was brought public recently last month by lead underwriters Goldman Sachs and Morgan Stanley, with JPMorgan also listed as one of the underwriters. Earlier this month, on January 7th and 13th, we also reported on stakes by mega funds T Rowe Price and Capital Research Global Investors, and by Morgan Stanley, when they filed Forms SC 13G's, indicating that they amended their ownership of the company shares. ZNGA, which debuted at $10 and traded as high as $11.50 on the opening day, has spent much of its time below the IPO price; however, shares have recently perked up after the company confirmed to All Things Digital that it was in active conversations with potential partners to jump into the online gambling market.
The concern over ZNGA has been that the valuation of over $7 billion at the offer price was just too high, with most of the value having been captured by private investors prior to the IPO. Furthermore, there is also uncertainty as Zynga's business model is still evolving, as although it has over 150 million monthly users, it depends mostly on a limited number of big spenders ("whales"), with the rest paying nothing.
Forest Oil Corp. (FST) is engaged in the exploration and production of oil, natural gas and natural gas liquids primarily in North America, with interest in the Texas Panhandle, the Western Canadian Sedimentary Basin in Alberta and British Columbia, the Eagle Ford Shale in South Texas, and the East Texas/North Louisiana area.
On Monday, New York-based deep value-oriented hedge fund Owl Creek Asset Management, headed by Jeffrey Altman, and with over $3.1 billion in equity assets per its 13-F Q3 filing, filed SEC Form SC 13G/A indicating that it holds a passive stake for investment purposes of 11.3 million or 9.9% of outstanding shares, an increase of 5.3 million shares from the 6.0 million shares it held at the end of Q3.
This makes Owl Creek the largest institutional holder of FST, well ahead of second place Perkins Investment Management that held 8.6 million shares at the end of Q3. FST trades at 12-13 forward P/E and 1.3 P/B compared to averages of 20.8 and 5.2 for its peers in the U.S. oil & gas exploration & production group, while earnings are projected to rise from $1.05 in 2011 to $1.11 in 2012.
Sealed Air Corp. (SEE) manufactures packaging and related materials and systems for food, industrial, medical and consumer applications. On Monday, New York and London-based private equity firm Clayton, Dublier & Rice filed SEC Form SC 13G indicating that it does not hold any shares in the company, a decrease from the 14.0 million or 7.3% of outstanding shares that it reported holding in a prior 13G filing in mid-October of last year. SEE trades at 11 forward P/E and 1.2 P/B compared to averages of 12.0 and 1.7 for its peers in the paper & plastic containers packaging group, while earnings are projected to rise at a respectable 5.8% annual rate from $1.60 in 2010 to $1.79 in 2012.
James River Coal Co. (JRCC) is engaged in the exploration and production of steam, bituminous and industrial-grade coal in Kentucky and Indiana. On Monday, New York-based Lazard Investment Management with over $167 billion in equity assets per its 13-F Q3 filing, filed SEC Form SC 13G/A indicating that it holds a passive stake for investment purposes of 1.16 million or 3.25% of outstanding shares, a decrease of 0.46 million shares from the 1.62 million shares it held at the end of Q3. JRCC shares trade within striking distance of multi-year lows after a spate of disappointing quarters recently that have seen earnings fall off from $2.03 in 2010 to a projected 23c in 2011 and a $1.54 loss in 2012.
Teradyne Inc. (TER) is a manufacturer of automatic test equipment products and services worldwide for the automotive, communications, consumer, computer and electronic game markets. On Monday, New York-based mutual fund company Royce & Associates, with over $27 billion in equity assets per its latest 13-F Q3 filing, filed SEC Form SC 13G/A indicating that it holds a passive stake for investment purposes of 21.6 million or 11.8% of outstanding shares, a decrease of 0.8 million shares from the 22.4 million shares it held at the end of Q3. TER shares trade at 13-14 forward P/E and 2.2 P/B compared to averages of 15.0 and 2.2 for its peers in the electronic test equipment group, while earnings are projected to fall from $1.33 in 2011 to $1.23 in 2012.
Pharmacyclics Inc. (PCYC) is a development-stage biotech company that is focused on discovering and developing innovative small-molecule drugs for the treatment of cancer and immune related diseases. On Monday, New York-based biotech-focused hedge fund Baker Bros. Life Sciences Capital (along with Baker Biotech Capital and 14159 Capital, all managed by brothers Julian and Felix Baker), with over $2.3 billion in equity assets per its latest 13-F Q3 filing, filed SEC Forms 4 indicating that they purchased 0.53 million shares, increasing their holdings to 8.6 million shares, up over three-fold in the past year, and now trading at ten-year highs.
Even so, analysts are still optimistic about the prospects for the company, with a mean target of $20, and of the seven analysts that follow the company, six rate it buy/strong buy, one a hold, and none at underperform/sell. Also, recently on December 13th Wedbush added PCYC to its "Best Ideas" list, raising the price target to $25 from $17.
Credit: Fundamental data in this article were based on SEC filings, I-Metrix® by Edgar Online®, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our 'opinions' and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.