It is not unusual for hedge fund managers to delay disclosing certain positions in their quarterly 13F filings with the Securities and Exchange Commission that detail U.S. equity-related holdings. All they have to do is seek and receive a confidential waiver from the SEC allowing them to not publicly reveal certain holdings.
This waiver enables managers to build up a full position in a stock before they tell the rest of the world about it. Activist investors and managers engaged in merger arbitrage are the most common users of this waiver. They often then file revised 13F documents containing the previously undisclosed holdings one to several quarters down the road.
Usually, the revisions contain one or just a handful of stocks, and often they are small positions or a small part of the overall portfolio.
Each quarter, several firms can be regularly counted on to file a slew of revisions for prior periods, including Chicago-based Citadel, New York–based Davidson Kempner Capital Management and Evanston, Illinois–based Magnetar Capital. However, Magnetar’s revision of its third-quarter 13F statement, filed last week, was particularly interesting. This is because the value of just eight common stocks detailed in the revised report — none of which were included in the original report — was about $2.5 billion. When the firm filed its timely third-quarter report in mid-November, it reported roughly $3.3 billion in common stocks. These figures do not include the put and call options also contained in the two reports, since their values are inflated due to SEC reporting requirements.
Five of the eight positions were sizable, and all of the companies were targets of acquisitions. None of them were contained in the original filing for the third quarter.
For example, in the revised filing Magnetar disclosed that it owned $643 million worth of stock in Chubb plus put options. On July 1 the insurance giant agreed to be acquired by insurer ACE in a deal that closed on January 14.
The hedge fund firm also disclosed it had a $535 million position in Broadcom, the semiconductor maker that agreed to be acquired by Avago Technologies in May. The deal was completed on February 1.
Magnetar also disclosed in the revised filing it had a $401 million position in Cameron International Corp. at the end of the third quarter. At the end of August, the company agreed to be acquired by Schlumberger in a merger of oil field service companies. The deal still has not closed.
The revised filing also showed a roughly $376 million stake in Precision Castparts Corp., which makes heavy-duty components for airplanes, generators and other industrial products. In January, Warren Buffett’s Berkshire Hathaway completed its $37 billion acquisition of the company.
Rounding out the five major positions recently disclosed, Magnetar owned $336 million of Altera Corp., the maker of programmable logic semiconductors that agreed to be acquired by Intel Corp. in June. The deal was finalized at the end of December.
