Many leading funds, including SAC Capital Advisors, Lone Pine Capital, and Relational Investors, filed forms 13-D and 13-G (and form 4) with the SEC last week (May 29th to June 1st, 2012), indicating that they had amended their ownership in U.S. traded public companies. Based on our analysis, the following are the more noteworthy filings (for more info on Forms 13-D and 13-G, and how to interpret that, please refer to the end of this article):
Clearwire Corp. (CLWR): CLWR provides wireless broadband networks for delivery of residential and mobile internet access and voice services. CLWR customers connect to the Internet using licensed spectrum, thus eliminating the confines of traditional cable or phone lines. The company offers its service in fifty U.S. markets, as well as in Europe. On Friday, Houston, TX-based diversified investments company Crest Financial Ltd. filed SEC Form SC 13D indicating that it opened a new 29.0 million share position in CLWR, and combined with an additional 9.9 million shares purchased by DTN LNG, DTN Investments, and other related entities, the reporting persons together opened a new 38.9 million share position in CLWR last week. Crest Financial is headed by Syrian-American dealmaker Jamal Daniel, and invests in a wide range of business ventures.
CLWR shares have mysteriously plummeted recently, despite the company reporting a string of good news, including its most recent Q1 (March), in which it beat analyst revenue estimates ($323 million v/s $308 million) and reported in-line earnings. Prior to that, last December, the company announced new agreements worth up to $1.6 billion with its corporate parent Sprint Nextel Corp. (S), followed by news in mid-March that Sprint terminated its spectrum hosting agreement with LightSquared. The latter news should have been a shot-in-the-arm for CLWR shares as it removed the threat that LightSquared would supplant it. However, shares have headed south, now down over 40% YTD and about 75% in the past year.
The only possible reason to account for the plunge seems to be the spectrum sale by Verizon Wireless (VZ) in mid-April, but that concern seems over-blown as the company still remains the single largest holder of spectrum in the U.S., and wireless bandwidth needs are rising due to exploding wireless usage. We believe that the plunge, exaggerated also maybe by the market mayhem in May, gives long-term investors a chance to buy into this company at discounted prices.
Additional major 5% institutional ownership filings last week included the following, the first of which is an accumulation in a plunging stock like CLWR, and the second is a new position in a surging stock:
- Hewlett Packard Co. (HPQ), a Silicon Valley marquee company, that is a leading provider of IT and outsourcing services, PCs and peripherals, printers and scanners, and servers and storage devices. On Wednesday, San Diego-based shareholder activist value-oriented hedge fund manager Relational Investors, with $5.94 billion in equity assets under management per their latest Q1 13-F filing, filed SEC Form 4 indicating that it added 13.1 million shares for $295.4 million, increasing its holdings in the company to 29.5 million shares.
- Gaylord Entertainment Co. (GET), a Nashville, TN-based leading hospitality and entertainment company that operates Gaylord hotels, legendary music showcase Grand Ole Opry in Nashville, and other entertainment brands and properties. On Friday, billionaire star fund manager Stephen Cohen's hedge fund SAC Capital Advisors, with over $15.7 billion in 13-F assets, filed SEC Form SC 13G indicating that it holds a new 2.51 million position, or 5.1% of the outstanding shares.
- Kinder Morgan Inc. (KMI), a provider of energy transportation and storage services in North America, in which hedge fund guru and Tiger cub Stephen Mandel's Lone Pine Capital filed SEC Form SC 13G indicating that it holds 71.8 million shares (including 54.2 million warrants), an increase from the 4.2 million shares it held at the time of its latest Q1 filing;
- Endeavour International Corp. (END), that is engaged in acquisition, exploration and development of energy reserves primarily in the North Sea and the U.S., in which Bellevue, WA-based hedge fund Steelhead Partners LLC filed SEC Form 4 indicating that it sold 137,053 shares for $1.1 million, ending with 3.98 million shares after the sale;
- Pandora Media Inc. (P), a premier provider of Internet radio in the U.S., offering listeners streaming music based on analysis of user listening behavior, and offering its services on traditional computers and on smart phones such as Android phones, BlackBerry's and the iPhone, in which San Francisco-based Walden Venture Capital filed SEC Form 4 that it sold 1.5 million shares for $18.0 million, ending with 19.2 million shares after the sale; and
- Valeant Pharmaceuticals (VRX), that develops primarily branded drugs to treat central nervous system disorders, pain and cardiovascular disease, in which San Francisco-based shareholder activist-oriented hedge fund ValueAct Capital Management, with $6.46 billion in 13-F assets at the end of Q1, filed SEC Form 4 indicating that it purchased 197,193 shares for $9.5 million, ending with 17.16 million shares after the purchase.
Form 13-D is commonly referred to as "beneficial ownership report," and is required when a person or a group of persons acquires beneficial ownership of more than 5% of the voting class of a company's equity securities; form 13-G is the abbreviated version of the form that is allowed under certain circumstances.
The information in forms 13-D and 13-G is extremely timely as it is required to be filed within ten days after the purchase, in contrast to 13-F quarterly filings by Institutions that are filed every three months. The information contained in 13-F filings, thereby, can as much as eighteen weeks old by the time it is disseminated to the public. Furthermore, by virtue of their 5% ownership in public companies, the information contained in the 13-D and 13-G filings indicates only high confidence or high conviction moves by institutions and insiders, and hence can be interpreted to be of greater relevance to the investment community than the 13-F quarterly filings. Furthermore, 13-D and 13-G filings often are a precursor to hostile takeover, company breakups and other "change of control" events, and often they will include a letter to management explaining the reason for their taking a large stake in the company.
Credit: Fundamental data in this article and company descriptions are based on SEC filings, Zacks Investment Research, Yahoo, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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