Keith Meister’s Corvex Management posted its best gains in its history in 2019.
The activist investor’s Corvex Select Partners and its offshore equivalent finished the year up about 40 percent, according to a person familiar with its results.
Corvex declined to comment on the results.
Institutional Investor earlier reported that Corvex had gained more than 20 percent through April, citing a person familiar with its results.
It is not publicly known exactly what investments drove returns and how much leverage its uses. Meister actively uses put and call options.
This said, it looks like MGM Resorts International played a big role in driving performance. The hospitality giant was Corvex’s biggest position for most of last year, according to regulatory filings.
At the end of the third quarter, the stock accounted for roughly 22 percent of the hedge fund firm’s U.S. common stock portfolio excluding the value of stock options. Shares of MGM surged about 37 percent last year.
Meister, who founded Corvex in 2010 after serving as the chief executive officer of Icahn Enterprises, was named to the board of MGM in January 2019.
Corvex was also boosted by Madison Square Garden, which owns the famous arena and the New York Rangers and Knicks pro sports teams. The stock gained 10 percent for the year.
Corvex bought most of its shares in the third quarter. There is no way of knowing what Corvex paid for the shares. But since the stock plummeted in late August and early September, the shares have risen about 18 percent.
Zendesk became Corvex’s fourth-largest position when the hedge fund established a new position in the customer service software maker in the third quarter. The stock gained about 5 percent in the fourth quarter.
Since the end of the third quarter, Forescout Technologies, a provider of network security products, has become one of Corvex’s largest long positions. The hedge fund firm aggressively boosted its stake in October after the stock plummeted when the company lowered third-quarter guidance.
In a regulatory filing, Corvex said it teamed up with Jericho Capital Asset Management to take a combined 14.5 percent activist stake in the company. Each of the two hedge fund firms owns roughly half of this position.
In the filing, Corvex said the shares “are undervalued and an attractive investment.” It said after the close of business on October 18, Corvex agreed to work with Jericho to engage the company and its management about its business and prospects.
It explained that Corvex and Jericho “believe that combining their complementary expertise, skill sets and perspectives will be beneficial in discussions” with the company. The filing said the two investors anticipate having private discussions with the company “as soon as practicable.”
Corvex bought nearly 1.5 million of its total 3.3 million shares for an average price of around $25, according to the filing. The stock finished the year at $32.80, up around 30 percent from the recent purchase price, give or take a percentage point. Corvex also bought nearly 868,000 shares from late August through early October, mostly for around $36 per share, according to the same filing.
On the other hand, shares of Diamondback Energy, Corvex’s second-largest common stock long for most of last year, fell about 1 percent last year.
“We think there is lots of value,” Meister said at an investment conference last year, suggesting he was anticipating an active deal market in the energy sector. The stock lost about 12 percent from the day before the presentation through year-end.
