Tracking ValueAct Portfolio - Q4 2022 Update

Summary

• ValueAct’s 13F portfolio value decreased from $5.90B to $5.31B this quarter.
• ValueAct increased New York Times while dropping Citigroup and TopBuild.
• The top three positions are Fiserv, KKR, and CBRE, and they add up to ~62% of the portfolio.

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This article is part of a series that provides an ongoing analysis of the changes made to ValueAct's 13F stock portfolio on a quarterly basis. It is based on their regulatory 13F Form filed on 2/14/2023. Please visit our Tracking ValueAct Portfolio article for an idea on their investment philosophy and our previous update for the fund's moves during Q3 2022.

This quarter, ValueAct's 13F portfolio value decreased ~10% from $5.90B to $5.31B. The number of holdings decreased from 12 to 9. The top three positions are at ~62% while the top five are at ~84% of the 13F assets. The largest position is Fiserv which is at ~28% of the portfolio. To know more about ValueAct's activist style of value investing, check out Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations.

Note 1: Jeffrey Ubben retired from ValueAct last June to launch Inclusive Capital Partners (climate change and social inequity focus). Many of the stakes previously in the ValueAct portfolio are now managed by Inclusive Capital Partners.

Note 2: It was reported in April 2020 that ValueAct has built a 2.6M share (~2% of the business, ~$1.1B) stake in Nintendo (OTCPK:NTDOY). The stock was around ~$10 at that time and is currently at around the same price.

New Stakes:

Salesforce (CRM): CRM is a 1.40% of the portfolio position purchased this quarter at prices between ~$128 and ~$165 and the stock currently trades well above that range at ~$183.

Note: Regulatory filings this month show them owning 3.49M shares. This is compared to 560K shares in the 13F report.

Stake Disposals:

Citigroup (C): The large ~8% Citigroup position established in Q4 2017 saw a ~500% stake increase in Q1 2018 at prices between $67 and $80. H2 2018 had also seen another ~25% increase at prices between $49 and $75. There was a ~20% selling in Q1 2021 at prices between ~$58 and ~$75. That was followed with a one-third reduction in Q3 2021 at prices between ~$65 and ~$74. Q2 2022 saw a ~22% selling this quarter at prices between ~$45.50 and ~$54. The disposal this quarter was at prices between $40.45 and $50.20. The stock currently trades at $51.08. They realized losses.

TopBuild Corp. (BLD): BLD was a 4.32% of the portfolio position established over the last three quarters at prices between ~$153 and ~$276. The elimination this quarter was at prices between ~$142 and ~$183. The stock currently trades at ~$201.

Rocket Companies (RKT): RKT was a minutely small 0.14% of the portfolio position disposed during the quarter.

Stake Decreases:

KKR & Co. (KKR): KKR is currently the second largest 13F position at ~21% of the portfolio. It was established in Q2 2017 and increased by a whopping ~800% the following quarter at prices between $18 and $20.50. Q4 2020 saw a ~15% selling at ~$37.50 per share. The three quarters through Q3 2021 had seen another ~37% selling at prices between ~$38 and ~$68. There was a ~17% stake increase in Q2 2022 at prices between ~$45 and ~$60. The stock currently trades at $55.85. This quarter saw a ~10% trimming.

LKQ Corporation (LKQ): LKQ is at ~6% of the portfolio. The stake was first purchased at around $27 per share in September 2019. Q1 2020 saw a ~30% stake increase at prices between ~$14 and ~$36. Q4 2021 saw a ~20% reduction at $57.28 in a repurchase agreement with the issuer. That was followed with a ~30% reduction in Q2 2022 at $50.35 per share. This quarter also saw a ~50% selling at $53.60 per share. The stock currently trades at $57.58.

Note 1: Regulatory filings since the quarter ended show them owning 1.55M shares of LKQ. This is compared to 6M shares in the 13F report. The reduction happened at ~$57 per share.

Note 2: In August 2020, ValueAct's Jacob H. Welch was elected to LKQ Corporation's board.

Stake Increases:

New York Times (NYT): The 8.34% NYT stake was built over the last three quarters at prices between ~$28 and ~$47 and the stock is now at ~$38.

Altus Power Group (AMPS): AMPS is a very small 0.49% of the portfolio position established in Q4 2021 at prices between ~$6.40 and ~$11 and the stock currently trades at $7.31. There was a marginal increase this quarter.

Kept Steady:

Fiserv Inc. (FISV): FISV is currently the largest position at ~28% of the portfolio. It was established over the five quarters through Q4 2021 at prices between ~$95 and ~$126. The stock currently trades at ~$117. Q2 2022 saw a ~12% stake increase.

Note: Regulatory filings from January show them owning ~11.5M shares. This is compared to ~$14.6M shares in the 13F report. The reduction happened at ~$101 per share.

CBRE Group (CBRE): CBRE is a large 13.39% of the 13F portfolio stake. The majority of the original position was established in 2011 & 2012 in the mid-to-high-teens price-range. Q4 2017 and Q1 2018 saw a ~31% selling at ~$44 per share and that was followed with a one-third selling in Q1 2019 at $49.51. Q3 2019 also saw a ~23% selling at $53.86. The stock is currently at ~$83. There was a ~10% trimming in Q3 2021 at ~$96 per share.

Seagate Technology (STX): STX stake is currently at 13.32% of the portfolio. It saw a huge ~220% increase in Q3 2016 at prices between $23 and $38.50. There was another ~45% increase in Q2 2017 at prices between $38.75 and $50.50. That was followed with a ~55% increase the following quarter at ~$33 per share. The five quarters thru Q2 2019 had seen a ~47% further increase at prices between $36 and $60. H1 2021 had seen a ~42% reduction at prices between ~$59 and ~$104. That was followed with a ~23% selling over the two quarters through Q2 2022 at prices between ~$79 and ~$116. The stock is now at $62.14.

Insight Enterprises (NSIT): NSIT is an 8.35% of the portfolio stake established in Q1 2021 at ~$95 per share cost-basis. Next quarter saw a ~160% stake increase at prices between ~$94 and ~$107. That was followed with a ~17% stake increase in Q3 2021. Q2 2022 also saw a similar increase at an average cost of ~$97 per share. The stock currently trades at ~$136. There was a ~8% further increase last quarter at ~$94 per share.

Note: Regulatory filings since the quarter ended show them owning 4.51M shares. This is compared to 4.42M shares in the 13F report. The minor buying happened at ~$128 per share. They have a ~13% ownership stake in the business.

The spreadsheet below highlights changes to ValueAct's 13F stock holdings in Q4 2022:

Jeffrey Ubben - ValueAct's Q4 2022 13F Report Q/Q Comparison (John Vincent (author))

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of C either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.