| Keith Meister, Corvex Management (Kholood Eid/Bloomberg) |
Keith Meister’s Corvex Management is off to a very strong start this year.
This is a relief to investors who have suffered through three straight disappointing years until now.
The activist firm, headed by the former chief executive officer of Icahn Enterprises, was up 1.7 percent in April. This boosted his gain for the year to 10.1 percent.
Corvex is one of the better-performing hedge funds this year. The four-month performance is especially impressive given that Corvex is essentially a long-only fund, and the stock market was down about 1 percent for the year through April.
Corvex is also one of the best-performing activists in a year when several high-profile activists are in the red. For example, through April Bill Ackman’s Pershing Square Holdings had lost 5.6 percent, while Barry Rosenstein’s JANA Partners had fallen 0.3 percent.
Nelson Peltz’s Trian Partners lost more than 5 percent in the first quarter, while Mick McGuire’s Marcato International shed 7.6 percent through the first quarter and was off by 6.7 percent through about mid-April.
Corvex declined to comment.
Its investors no doubt are feeling a lot better — and not because other activists are losing money. They are likely mindful that the fund posted low to mid-single digit gains in each of the two previous years after losing about 10 percent in 2015.
Little surprise, then, assets have fallen from more than $7 billion two years ago to around $5 billion.
Like most activists, Corvex runs a somewhat concentrated book. At year-end it had 19 individual U.S. long holdings, six of which — or nearly one-third — it established in the fourth quarter. However, none of the new positions cracked the top-ten. We won’t know where its first quarter portfolio stood for another one-and-a-half weeks.
By far its largest position is in Energen. In March Corvex reached a compromise agreement under which the oil and gas producer agreed to expand its board of directors by two members, to a total of 11. The new directors include Vincent Intrieri, who has been associated with Carl Icahn investment funds since at least 2004. The other new director is Jonathan Cohen, the founder of Atlas Energy and Atlas Pipeline Partners.
In January Corvex, which owns a shade less than 10 percent of the shares, nominated four individuals to Entergy’s staggered board of directors, including Intrieri and Cohen. In the first four months of the year, shares of Energen are up more than 13 percent.
Otherwise, Corvex has been quiet of late on the activist front.
Bank of America, Corvex’s second-largest long, is up about 1.4 percent for the year. Corvex has not taken an activist stance with the banking giant.
Hospital management giant Envision Healthcare Corp. is up about 7.5 percent for the first four months. The stock had among the heaviest hedge fund ownership concentration at year-end.
Last year The New York Times found that the company has an average out-of-network billing rate that is much higher than the national average.
Corvex’s next three largest positions are among the most popular hedge fund stocks, including Facebook and Alphabet, as well as Comcast.
