September 9, 2019 BARRON’S M9
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 Aug. 29 through Sept. 4, 2019.
Source:InsiderScore.com
Activist Holdings
Lumber Liquidators (LL)
F9 Investment revealed on Sept. 3 that
it possessed 2,212,367 shares of the hard-
wood-flooring retailer, equal to 7.7% of
the outstanding stock, inclusive of 500,000
shares underlying exercisable options.
That stake includes 1,346,240 common
shares purchased from Aug. 7 to Aug. 16
at an average price of $7.88 apiece.
F9 is a registered investment advisor
founded and managed by Thomas Sulli-
van, CEO of privately held Cabinets to
Go, who desires to engage Lumber Liqui-
dators to “discuss strategic alternatives.”
Specifically, F9 is interested in two objec-
tives: either the sale of Lumber Liquida-
tors where F9 may participate as a buyer
or investor, or the potential merger with
Cabinets to Go.
F9 also cited that it may reach out to
other stockholders and interested parties
and enter nondisclosure agreements or
financial arrangements as needed as it
relates to the above, though no specific
plan or proposal has been adopted by F9.
Tailored Brands (TLRD)
Scion Asset Management disclosed a
5.1% interest in the apparel retailer,
equal to 2,600,000 shares, on Aug. 30.
That figure includes 750,000 purchased
during the period of July 2 through Aug.
27 at per share prices of $4.30 to $5.94.
Scion had addressed Tailored Brands’
board by letter on three separate occa-
sions in August, stating and reiterating
that the best route to enhance share-
holder value is to cease paying out a
stock dividend and instead repurchase
stock. Tailored Brand’s common stock on
the open market. Scion believes that such
a move is a “more efficient manner to re-
ward long-term shareholders when [Tai-
lored Brands’] share price is heavily dis-
counted,” largely traceable to what Scion
believes was the misallocation of capital
to fund Tailored Brands’ $1.8 billion ac-
quisition of Jos. A. Banks in 2014 that has
long constrained Tailored’s finances.
The final letter, dated Aug. 30, con-
cerned speculation that Sycamore Part-
ners had approached Tailored Brands
with an acquisition offer that valued each
Tailored Brands share at $10, a figure
that Scion contends undervalues the
retailer and “will not be acceptable to
shareholders.”
Scion again urged Tailored Brands’
board and management that a stock buy-
back would be the best move going for-
ward, and if Tailored Brands is “consider-
ing asset sales,” it should focus on the
domestic business and look to sell its
Canada operations, using those potential
proceeds to help initiate or accelerate the
suggested repurchase authorization.
Original Filings
Braemar Hotels & Resorts (BHR)
AL Shams Investments disclosed on
Aug. 29 an initial position of 3,075,194
shares of the hotel and resort operator,
equal to nearly 9.3% of the outstanding
stock.
The stake includes 775,194 shares pur-
chased from June 25 to Aug. 19 at a price
range of $8.78 to $9.94 apiece. AL re-
vealed that it “believes that [Braemar]
has an attractive portfolio of hotel
assets...and is undervalued in the stock
market.” Additionally, AL, without a de-
veloped plan or proposal, has also di-
vulged that it has had, and may continue
to have, “constructive discussions” re-
garding “alternative strategies and op-
portunities for [Braemar] to enhance
shareholder value.”
Increases in Holdings
National CineMedia (NCMI )
Standard General lifted its holding of
the in-theater digital advertising provider
to 15,808,390 shares. The higher stake
resulted from the purchase of 452,000
shares from Aug. 21 through Aug. 28 at
per share prices of $7.07 to $7.95 and
gives Standard General a 20% interest in
the stock.
Decreases in Holdings
Campbell Soup (CPB)
Third Point reported on Sept. 4 a low-
ered position of 17,290,000 shares of the
food-and-beverage maker. During the
period of July 8 through Aug. 30, Third
Point sold 1,060,000 shares at $41.15 to
$46.76 each, resulting in a stake of ap-
proximately 5.7% of Campbell’s outstand-
ing stock.
Third Point revealed that the decision
to sell was “the result of a portfolio man-
agement determination...as [Campbell
Soup] has appreciated significantly since
the original investment was made in
2018.”
Further, Third Point commended
Campbell Soup’s progression during the
past year, “stabilizing the business, pur-
suing asset sales, and shoring up the bal-
ance sheet.”
Lastly, Third Point is “pleased with
[CEO Mark Clouse] and remains confi-
dent in his ability to execute against the
strategic plan laid out at [Campbell
Soup’s] investor day.”
Pacific Biosciences of California (PACB)
Magnetar Financial revealed a reduced
position in the biotech firm of 7,603,652
shares, equal to nearly 5% of the out-
standing stock. The lowered holding
resulted from transactions during the
period of July 2 through Aug. 27, where
Magnetar purchased 171,299 shares at
prices of $5.34 to $6.21 each and sold
509,020 at a price range of $5.15 to $6.08
apiece. Magnetar had disclosed an initial
6.3% interest in Pacific Biosciences,
roughly 9.42 million shares, last Novem-
ber and has steadily trimmed its stake
since that time.
Telaria (TLRA)
Edenbrook Capital sold 234,511 shares
from Aug. 8 to Aug. 30 at prices of $9.30
to $10.36 each. Edenbrook now owns
3,977,198 shares of the video content man-
ager and data analytics provider, or 8.7%
of the tradable stock.
This was Edenbrook’s first reduction
in its Telaria stake after it amassed a
high of 4.43 million shares, a 10% interest
in the firm, at the end of 2018.
InsiderScore.com is a provider of insider,
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or call 866-400-9595.
The Activist Spotlight
Box (BOX)
Business: enterprise content
management
Investor’s Average Cost: $15.72
Stock Market Value: $2.5 billion
($16.65/share)
What’s Happening: Starboard
Value has acquired a 7.5% position
for investment purpose.
Key Numbers:
31.7%: Box’s revenue growth rate
from 2016 to 2017
13%: Box’s current estimated rev-
enue growth rate
39.6% : decline in Box’s stock
price over the past year, versus an
increase of 0.18% for the S&P 500
index
29%: percentage of shares with-
held from two directors for re-elec-
tion at last year’s annual meeting.
Behind the Scenes: Box has
state-of-the-art technology and prod-
ucts and is successfully competing
with legacy enterprise businesses
owned by IBM and Microsoft. While
the founders have done an excellent
job of building this business, the com-
pany is in a transition period where
its hyper-growth period has slowed
and the margins have not yet caught
up, resulting in poor stock perfor-
mance.There are two paths to value.
First, there is an opportunity to im-
prove margins. Technology compa-
nies like this generally have a rule of
40—where a combination of growth
and operating margins should equal
or exceed 40%. At 13% growth and
0% margins, Box has room for im-
provement. Second, this company
could be a valuable strategic asset
for large tech companies such as
IBM, Salesforce, and Microsoft.
Founder-led companies like this are
often activist targets because the
visionaries who created the company
may not be the best people to oper-
ate it when it gets to 2,000 employ-
ees. Based on a recent shareholder
vote, many shareholders would wel-
come change. —KENNETHSQUIRE
The 13D Activist Fund, a mutual fund
run by an affiliate of the author and not
connected to Barron’s, has a long posi-
tion in Box. In addition, the author
publishes and sells 13D research
reports, whose buyers may include
representatives of participants in,
and targets of, shareholder activism.