Barron\'s - 16.09.2019

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M10 BARRON’S September 16, 2019


13D Filings


Investors Report to the SEC


13Ds are filed with the Securities and Exchange Commission within 10 days of an entity’s


attaining a greater than 5% position in any class of a company’s securities. Subsequent


changes in holdings or intentions must be reported in amended filings. This material has


been extracted from filings released by the SEC from Sept. 5 through Sept. 11, 2019.


Source:InsiderScore.com


Activist Holdings


First United(FUNC)


Driver Managementrevealed on Sept. 5


that it holds 360,637 shares of the commu-


nity bank, equal to nearly 5.1% of the out-


standing stock. That figure includes


256,637 shares purchased from July 24


through Aug. 30 at a price range of $19.93


to $21.55 each. Driver disclosed that it


intends to “purchase additional shares, as


[it] believes First United represents a


very attractive investment opportunity—an


opportunity that others seem to have


discovered, as well.”


Driver continued that First United


“lacks scale to justify an elevated expense


base” and possess a branch network that


has been unable to “create sufficient oper-


ating leverage due to lackluster organic


loan growth.” Driver recommends that a


sale to a larger peer would be the best


route to enhance shareholder value.


It believes that such a move would “un-


lock the value of [First United’s] high-


quality deposit franchise and attractive


trust and wealth management businesses,”


and also lift shareholder value without the


“risk and uncertainty” of First United


attempting to scale-up its business on its


own.


Red Robin Gourmet Burgers(RRGB)


Vintage Capitaldisclosed on Sept. 10 that


it owned 1,500,000 shares of the small-cap


casual-dining chain, or 11.6% of Red


Robin’s outstanding stock. In July, Vintage


Capital notified the company that it was


prepared to offer $40 per Red Robin share


in a take-private acquisition, adding that it


would seek a special shareholders meeting


if Red Robin’s board “failed to engage”


with Vintage regarding its proposal. On


Sept. 5, Red Robin’s board announced that


it “unanimously rejected” the unsolicited


offer, “as the strategic plan currently be-


ing implemented by Red Robin positions


the company to deliver greater long-term


value...than Vintage’s proposal.”


On Sept. 10, Vintage responded by let-


ter that it “intends to investigate...includ-


ing through a thorough review of the


company’s books and records as permit-


ted by applicable law,” because it feels


that Red Robin has not been completely


forthcoming in its reasons for rejecting


the acquisition. Vintage concluded that it


will review its “options as to the replace-


ment of all or a portion” of Red Robin’s


board.


Original Filings


Avid Technology(AVID)


Impactive Capitaldisclosed on Sept. 6 an


initial position of 3,665,256 shares of the


audio- and video-content maker and dis-


tributor. That stake counts 2,528,227 shares


purchased at $5.98 to $9.97 each during the


period of July 8 through Sept. 6.


Impactive said that it acquired the


shares because it was an “attractive invest-


ment.” Impactive also revealed on Sept. 6


that it entered a nondisclosure agreement


with Avid Technology so the two may dis-


cuss various topics, including Avid’s “busi-


ness, operations, and communications with


investors,” inclusive of its preparations for


the company’s investor day presentations.


Impactive has no specific plans or pro-


posals at present, and the agreement will


terminate no later than Nov. 30.


Callon Petroleum(CPE)


Paulsondisclosed on Sept. 9 a new posi-


tion in the independent oil-and-gas ex-


plorer of 21,593,523 shares, all of which


was purchased during the period of July


15 to Aug. 14.


The stake was acquired at per share


prices of $4.12 to $5.73 and gives Paulson


a 9.5% interest in the energy firm. On the


date of the disclosure, Paulson addressed


a letter to Callon Petroleum’s board oppos-


ing Callon’s proposed $3.2 billion all-stock


acquisition of Carrizo Oil & Gas an-


nounced in mid-July. Paulson believes that


investors bought Callon’s stock due to its


“commitment to be a pure-play, high qual-


ity Permian producer. As such...it has


traded at a meaningful premium to those


of its multi-basin peers.”


It added that a combination with Car-


rizo’s “inferior Eagle Ford assets...would


eliminate this pure-play status” and “per-


manently discourage potential acquirers of


Callon.”


Paulson believes that the proposed


premium to be paid to Carrizo is “unwar-


ranted,” and according to the proxy, “no


other potential buyer of Carrizo was


willing to pay such a premium.” Callon


intends to issue “an additional 83%” of


outstanding stock to close a deal that


“would massively dilute current sharehold-


ers.” Because of this and other factors,


Paulson will vote its Callon shares against


the merger and proposes that a sale of


Callon would be much more rewarding for


shareholders.


Increases in Holdings


Sunrun(RUN)


Tiger Global Managementcited a larger


position in the solar-energy firm of


26,056,051 shares, equal to 22.2% of the


tradable stock, without citing any plans or


proposals. The stake includes 2,122,338


shares acquired from Aug. 20 to Sept. 11


at prices of $14.78 to $15.50 each. Tiger


Global first disclosed a 7.8% interest in


Sunrun in late March 2018, then a 7.8%


interest in the firm, and has steadily


raised its position to the current level.


Cerecor(CERC)


Armistice Capitaldisclosed a higher


stake in the biopharmaceutical company of


39,368,948 shares. That tally counts


1,200,000 shares bought directly from


Cerecor through a Sept. 4 securities pur-


chase agreement at a price of $3.13 each.


Armistice now owns 64.3% of the company.


Decreases in Holdings


Babcock & Wilcox Enterprises(BW)


Steel Partnersrevealed on Sept. 10 a


reduced holding in the power-generation


hardware maker after sales on Aug. 28


through Sept. 10. During that span, Steel


Partners sold 1,000,000 shares at a price


range of $3.70 to $3.90 apiece, lowering its


interest in the manufacturer to 7.1%, or


3,280,992 common shares. No reason was


given for Steel Partners’ nearly one-quar-


ter cut to its stake.


InsiderScore.com is a provider of insider,


institutional, and stock-buyback data,


analytics, and research. For a free analysis


of your holdings, visit InsiderScore.com


or call 866-400-9595.


The Activist Spotlight


Bloomin’ Brands(BLMN)


Business:casual restaurants


Investor’s Average Cost:$16.33


Stock Market Value:$1.6 billion


($19.44/share)


What’s Happening:Jana Part-


ners intends to discuss with manage-


ment a potential sale of the company.


Key Numbers:


1 0%:Bloomin’ Brands Ebitda


margin, versus 14% for Darden


6 times:Bloomin’ Brands’ valua-


tion relative to 2020 Ebitda, versus


11 times for Darden


(12.9%), (14.7%), (0.96%):


Bloomin’ Brand’s one- three- and five-


year stock return, versus 0.73%,


34.3%, and 45.9% for the S&P 500


Behind the Scenes:Jana has had


great success in persuading boards to


sell consumer businesses such as


PetSmart, Safeway, and Whole Foods.


Jana had filed a 13D on Bloomin’ in


2017 but sold its position with a 38.9%


return after the company made some


requested changes. Since then, the


stock has significantly underper-


formed. This is an excellent example


of an activist giving a company time


to execute its plan and is engaging


only because management is unable


to do so by itself. Bloomin’ trails its


peers in Ebitda margin, Ebit margin,


and valuation multiple, resulting in


poor stock performance. It has a his-


tory of poor capital allocation, repur-


chasing $35 million of stock in the


fourth quarter of 2016 at an average


price of $19.27, while its CEO exer-


cised options to sell 250,000 shares at


$17.15 per share. Jana will probably


push the board to sell to a private-


equity buyer who could fix the capi-


tal-allocation and margin issues and


review the company’s portfolio. If


Jana is met with resistance, its


history shows that it won’t hesitate to


make board nominations at the next


annual meeting. The company said it


“will consider all perspectives.”


—KENNETHSQUIRE


The 13D Activist Fund,a mutual fund


run by an affiliate of the author and not


connected toBarron’s,has a long position


in Bloomin’ Brands. In addition, the


author publishes and sells 13D research


reports, whose buyers may include


representatives of participants in,


and targets of, shareholder activism.

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