WATER ISLAND CAPITAL LLC recently filed their 13F report for the first quarter of 2023, which ended on 2023-03-31.
The 13F report details which stocks were in a guru’s equity portfolio at the end of the quarter, though investors should note that these filings are limited in scope, containing only a snapshot of long positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They are not required to include international holdings, short positions or other types of investments. Still, even this limited filing can provide valuable information.
Water Island Capital LLC is an investment management firm based out of New York City, New York. The company was originally founded in 2000 as a “specialist in event-driven investing” and is headed by President and CEO John S. Orrico. Water Island Capital conducts its research internally and externally, allocating its assets in the public equity and fixed income markets on a global scale. The company invests most heavily in the information technology sector, which alone makes up a fifth of the firm’s total asset allocations, and also invests in the other, making up just under another fifth of its allocations, finance, industrials, consumer discretionary, and real estate sectors, among other sectors to a lesser degree, in order of decreasing allocation. Water Island Capital holds its allocations an average of only 0.71 quarters and, in the most recent quarter, had a turnover rate of approximately 128%, indicating a fast trading approach. Water Island Capital is owned by its employees and currently operates with 50 employees of which 19 are investment professionals. The company oversees over $2.6 billion in total assets under management spread across 7 total accounts, all of which are discretionary accounts. Both of Water Island Capital’s total number of accounts and total assets under management have been increasing in recent years with its total number of accounts growing from 1 back in 2010 to its current amount and its total assets under management growing significantly from under $200 million five years ago to well over 15 times that amount today. The company mainly caters to investment companies, which makes up almost the entirety of its client base, and also provides services to other pooled investment vehicles to a lesser degree. Water Island Capital is the advisory to The Arbitrage Funds and offers the Arbitrage Fund, Event Driven Fund, and Credit Opportunities fund in its lineup of mutual funds.
As of the latest 13F report, the guru’s equity portfolio contained 62 stocks valued at a total of $1.22Bil. The top holdings were ATVI(6.94%), VMW(5.30%), and AJRD(5.18%).
According to GuruFocus data, these were WATER ISLAND CAPITAL LLC’s top five trades of the quarter.
Change Healthcare Inc
The guru sold out of their 3,391,670-share investment in NAS:CHNG. Previously, the stock had a 5.34% weight in the equity portfolio. Shares traded for an average price of $27.49 during the quarter.
On 05/25/2023, Change Healthcare Inc traded for a price of $27.49 per share and a market cap of $9.03Bil. The stock has returned 30.16% over the past year.
GuruFocus gives the company a financial strength rating of 3 out of 10 and a profitability rating of 3 out of 10.
In terms of valuation, Change Healthcare Inc has a price-book ratio of 2.73, a EV-to-Ebitda ratio of 16.98 and a price-sales ratio of 2.55.
Alleghany Corp
The guru sold out of their 99,211-share investment in NYSE:Y. Previously, the stock had a 4.77% weight in the equity portfolio. Shares traded for an average price of $843.86 during the quarter.
On 05/25/2023, Alleghany Corp traded for a price of $847.79 per share and a market cap of $11.41Bil. The stock has returned 27.62% over the past year.
GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rating of 7 out of 10.
In terms of valuation, Alleghany Corp has a price-earnings ratio of 33.43, a price-book ratio of 1.44, a price-earnings-to-growth (PEG) ratio of 1.49, a EV-to-Ebitda ratio of 13.62 and a price-sales ratio of 0.99.
The price-to-GF Value ratio is 0.96, earning the stock a GF Value rank of 5.
Zendesk Inc
The guru sold out of their 960,775-share investment in NYSE:ZEN. Previously, the stock had a 4.19% weight in the equity portfolio. Shares traded for an average price of $76.47 during the quarter.
On 05/25/2023, Zendesk Inc traded for a price of $77.48 per share and a market cap of $9.63Bil. The stock has returned -20.30% over the past year.
GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rating of 3 out of 10.
In terms of valuation, Zendesk Inc has a price-book ratio of 27.67, a EV-to-Ebitda ratio of -45.44 and a price-sales ratio of 5.97.
The price-to-GF Value ratio is 0.51, earning the stock a GF Value rank of 8.
Horizon Therapeutics PLC
The guru established a new position worth 426,020 shares in NAS:HZNP, giving the stock a 4.17% weight in the equity portfolio. Shares traded for an average price of $83.06 during the quarter.
On 05/25/2023, Horizon Therapeutics PLC traded for a price of $99.88 per share and a market cap of $22.83Bil. The stock has returned 12.99% over the past year.
GuruFocus gives the company a financial strength rating of 7 out of 10 and a profitability rating of 6 out of 10.
In terms of valuation, Horizon Therapeutics PLC has a price-earnings ratio of 62.82, a price-book ratio of 4.48, a EV-to-Ebitda ratio of 27.29 and a price-sales ratio of 6.59.
The price-to-GF Value ratio is 0.78, earning the stock a GF Value rank of 7.
Avalara Inc
The guru sold out of their 581,162-share investment in NYSE:AVLR. Previously, the stock had a 3.06% weight in the equity portfolio. Shares traded for an average price of $92.84 during the quarter.
On 05/25/2023, Avalara Inc traded for a price of $93.48 per share and a market cap of $8.28Bil. The stock has returned -47.40% over the past year.
GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rating of 2 out of 10.
In terms of valuation, Avalara Inc has a price-book ratio of 8.03, a EV-to-Ebitda ratio of -67.76 and a price-sales ratio of 10.33.
The price-to-GF Value ratio is 0.50, earning the stock a GF Value rank of 4.
Please note, the numbers and facts quoted are as of the writing of this article and may not factor in the latest trading data or company announcements.
When GuruFocus covers insider information, we only track open market or the private purchase and sale of common stock with the transaction code of P or S. Therefore, all the transactions mentioned in this article are only the ones with transaction code of P or S.
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