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.


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,


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


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.

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