Barron\'s - 09.09.2019

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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.

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


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


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 [Campbell

Soup] has appreciated significantly since

the original investment was made in


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. is a provider of insider,

institutional, and stock-buyback data,

analytics, and research. For a free analysis

of your holdings, visit

or call 866-400-9595.

The Activist Spotlight

Box (BOX)

Business: enterprise content


Investor’s Average Cost: $15.72

Stock Market Value: $2.5 billion


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


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.

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