It is difficult to predict future activist targets simply by tracking the regulatory filings of hedge fund activist investors. Sandell Asset Management’s most recent filing is just the latest example.
The hedge fund firm headed by Thomas Sandell disclosed on Thursday that it owns 5.2 percent of Antiunity, an Israeli data analytics company. Sandell did not hold a position in the stock at year-end.
For activist watchers, this is a meaningless event, however.
For one thing, the filing was made via a form 13G, suggesting the investment is passive and not active. That said, it is not unusual for hedge funds to convert a 13G position to a 13D one in the future.
More importantly, though, a month ago Antiunity agreed to be acquired by Qlik, a privately-held Swedish software company. No doubt Sandell’s investment was more of a merger arbitrage play. Indeed, the activist often moonlights as a merger arbitrageur.
For example, of the stocks Sandell held as of the end of the December quarter, 12 were new positions. At the same time, it liquidated 16 common stock holdings.
What’s especially intriguing about the year-end portfolio is that three of its five biggest common stock holdings and eight of its 11 biggest long positions were new positions.
But like Antiunity, three of the eight new positions were merger arbitrage plays — targets of recently announced deals. For example, cybersecurity software company Imperva, its second-biggest new position, was acquired earlier this year by private equity firm Thoma Bravo in a $2.1 billion deal announced in October.
Sandell’s two big new health care positions are also targets of agreed-upon deals that closed earlier this year. Drug maker Shire was acquired in early January by Japan-based Takeda Pharmaceuticals for $62 billion. Also in January, GlaxoSmithKline completed the acquisition of Tesaro, a biopharmaceutical company that became Sandell’s eleventh-biggest common stock long at year-end after taking an initial position in the stock.
Meanwhile, Sandell’s biggest holding — Twenty-First Century Fox — was not a new position in the fourth quarter. But the company’s acquisition by Disney was completed earlier this month. Fox Corp. was spun off and began trading. It is not known yet whether Sandell has held on to new Fox or liquidated the entire bet altogether.
Sandell’s biggest new position was Red Hat, the open-source software company, while its third-biggest new position and fifth-biggest common stock position was Integrated Device Technology, a semiconductor company.
