What we’re looking for
The U.S. holdings of well-known activist investors.
We looked at the Canadian holdings of these investors last week. The activists we’re tracking are those who make a practice of buying large stakes in publicly held corporations because they want to drive change and thereby realize a profit on their investment.
Once viewed as corporate raiders, today’s activist investors are more interested in fixing companies and finding ways to increase value. Their presence can be a clue that profitable change has begun at a firm.
How we did it
Jamie Hynes, sales director with S&P Capital IQ, used his firm’s database to look for significant investments in U.S. companies by investors that Capital IQ has flagged as activists. To keep our list to a manageable length, we examined only companies with at least $1-billion (U.S.) in stock market capitalization.
Significant investments are defined as those greater than 10 per cent of the company’s market capitalization but less than 20 per cent. We excluded larger investments on the assumption that the firms that hold them may have already reaped the benefits of substantial ownership.
More about S&P Capital IQ
S&P Capital IQ offers a comprehensive set of tools for fundamental analysis of global securities, idea generation and work flow management. The Web and Excel-based platform provides access to both real-time and historical information on companies, markets, transactions and people around the world.
What we found
A total of 26 companies passed the screen. We present the 20 smallest in the accompanying table because smaller firms tend to be less followed by analysts and thus may present superior investing opportunities.
Among the activist investors spotlighted in our screen are well-known players such as Southeastern Asset Management Inc., Icahn Capital LP and Pershing Square Capital, as well as lesser-known firms such as Biglari Capital Corp.
By and large, the stocks on our list are not obvious bargains. Most trade at relatively high share prices in relation to their tangible book values and earnings.
However, the canny activists who have bought into these companies see something they like in these stocks. That’s not a guarantee that each of these investments will prove to be profitable, but it’s an encouraging sign.
U.S. holdings of prominent investors
|Company||Ticker||Activist investors (% owned)||Market cap. ($ mil.)|
|Lamar Advertising Co.||LAMR-Q||SPO Advisory Corp. (14.02)||3,656|
|Cincinnati Bell Inc.||CBB-N||GAMCO Investors Inc. (12.04)||1,039|
|The Hain Celestial Group||HAIN-Q||Icahn Capital LP (15.78)||2,590|
|Ryman Hospitality Properties||RHP-N||GAMCO Investors Inc. (12.96)||1,776|
|Cracker Barrel Old Country Store||CBRL-Q||Biglari Capital Corp. (15.80)||1,494|
|Mentor Graphics Corp.||MENT-Q||Icahn Capital LP (14.49)||1,719|
|TW Telecom Inc.||TWTC-Q||Southeastern Asset Mgt. Inc. (10.65)||3,832|
|Service Corp. International||SCI-N||Southeastern Asset Mgt. Inc. (15.48)||2,985|
|Vail Resorts Inc.||MTN-N||Southeastern Asset Mgt. Inc. (10.05)||2,023|
|Dollar Thrifty Automotive Group||DTG-N||Pentwater Capital Mgt. LP (10.02)||2,198|
NM = not material or operating at a loss/deficit. All dollar figures U.S. Source: S&P Capital IQ
|Company||Ticker||Activist investors (% owned)||Market cap. ($ mil.)||Price $ (Oct. 30/12)||Price to tangible BV||P/E (trailing)||% total return last 3 mos.||% total return last 12 mos.|
|Lamar Advertising Co.||LAMR-Q||SPO Advisory Corp. (14.02)||3,656||39.17||NM||270.0||29.5||84.5|
|Cincinnati Bell Inc.||CBB-N||GAMCO Investors Inc. (12.04)||1,039||5.27||NM||17.2||44.3||74.3|
|The Hain Celestial Group||HAIN-Q||Icahn Capital LP (15.78)||2,590||57.31||NM||32.7||3.5||73.6|
|Ryman Hospitality Properties||RHP-N||GAMCO Investors Inc. (12.96)||1,776||39.37||1.8||80.1||10.4||73.0|
|Cracker Barrel Old Country Store||CBRL-Q||Biglari Capital Corp. (15.80)||1,494||63.17||3.9||16.0||2.8||56.4|
|Mentor Graphics Corp.||MENT-Q||Icahn Capital LP (14.49)||1,719||15.45||4.7||22.2||0.8||49.7|
|TW Telecom Inc.||TWTC-Q||Southeastern Asset Mgt. Inc. (10.65)||3,832||25.37||6.1||50.2||4.5||40.5|
|Service Corp. International||SCI-N||Southeastern Asset Mgt. Inc. (15.48)||2,985||14.03||NM||19.0||8.6||39.0|
|Vail Resorts Inc.||MTN-N||Southeastern Asset Mgt. Inc. (10.05)||2,023||56.62||4.6||116.2||16.0||29.7|
|Dollar Thrifty Automotive Group||DTG-N||Pentwater Capital Mgt. LP (10.02)||2,198||78.87||3.3||12.6||8.3||28.3|
|Calpine Corp.||CPN-N||SPO Advisory Corp. (11.95)||8,256||17.69||2.3||NM||0.7||28.1|
|Ixia||XXIA-Q||Katelia Capital Group Ltd (17.88)||1,019||13.90||NM||49.3||7.5||27.8|
|DineEquity Inc.||DIN-N||Southeastern Asset Mgt. Inc. (16.94)||1,053||57.48||NM||15.2||27.8||24.9|
|Martin Marietta Materials Inc.||MLM-N||Southeastern Asset Mgt. Inc. (13.57)||3,749||81.78||5.3||84.1||5.3||15.7|
|GATX Corp.||GMT-N||GAMCO Investors Inc. (12.15)||1,959||41.78||1.7||17.3||3.6||11.9|
|Theravance Inc.||THRX-Q||The Baupost Group, LLC (15.08)||2,393||24.78||12.7||NM||-17.1||10.9|
|Saks Inc.||SKS-N||Southeastern Asset Mgt. Inc. (12.20)||1,566||10.21||1.4||27.7||-0.1||-3.1|
|Consol Energy Inc.||CNX-N||Southeastern Asset Mgt. Inc. (11.42)||7,989||35.10||2.1||25.5||24.2||-13.0|
|J. C. Penney Co. Inc.||JCP-N||Pershing Square Cap. Mgt. LP (17.84)||5,563||25.39||1.5||NM||14.6||-21.2|
|Resolute Forest Products Inc.||RFP-N||Steelhead Partners, LLC (12.98)||1,212||12.21||0.4||10.0||30.2||-23.9|