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.