Elliott Management, the investment firm founded by renowned guru Paul Singer (Trades, Portfolio) in 1977, disclosed four new positions in its third-quarter portfolio, which was released in November.
The guru’s New York-based hedge fund is known for taking large positions in underperforming companies and then advocating for management to implement changes that will turn them toward profitability.
Based on these criteria, the activist firm established holdings in AT&T Inc. (T, Financial), Mobile Mini Inc. (MINI, Financial), Carbonite Inc. (CARB, Financial) and Cision Ltd. (CISN, Financial) during the quarter.
AT&T
As previously reported in September, Singer’s firm invested in 3.12 million shares of AT&T, dedicating 0.99% of the equity portfolio to the stake. The stock traded for an average price of $35.06 per share during the quarter.
The Dallas-based telecommunications company has a $272.55 billion market cap; its shares were trading around $37.34 on Tuesday with a price-earnings ratio of 16.71, a price-book ratio of 1.48 and a price-sales ratio of 1.49.
The Peter Lynch chart shows the stock is trading slightly above its fair value, suggesting it is overpriced.
GuruFocus rated AT&T’s financial strength 3 out of 10. As a result of issuing approximately $17.5 billion in new long-term debt over the past three years, the company has low interest coverage. In addition, the Altman Z-Score of 1.08 indicates the company could be at risk of going bankrupt.
The company’s profitability fared much better, scoring a 7 out of 10 rating. Although the operating margin is contracting, it still outperforms over half of its competitors. AT&T is also supported by stable returns and a moderate Piotroski F-Score of 5, which implies business conditions are stable. Although the telecom giant has recorded a decline in revenue per share over the past three years, it still has a business predictability rank of 2.5 out of five stars. According to GuruFocus, companies with this rank typically see their stocks gain an average of 7.3% per annum over a 10-year period.
Of the gurus invested in AT&T, Pioneer Investments (Trades, Portfolio) has the largest stake with 0.27% of outstanding shares. Other top guru shareholders include Barrow, Hanley, Mewhinney & Strauss, Richard Pzena (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), the T Rowe Price Equity Income Fund (Trades, Portfolio) and Michael Price (Trades, Portfolio).
Mobile Mini
Elliott Management picked up 2 million shares of Mobile Mini, allocating 0.62% of the equity portfolio to the stake. During the quarter, the stock traded for an average price of $32.56 per share.
Headquartered in Phoenix, the portable storage company has a market cap of $1.66 billion; its shares were trading around $37.45 on Tuesday with a price-earnings ratio of 21.44, a price-book ratio of 2.06 and a price-sales ratio of 2.72.
According to the Peter Lynch chart, the stock is overvalued.
Mobile Mini’s financial strength was rated 4 out of 10 by GuruFocus. In addition to low interest coverage, the Altman Z-Score of 1.6 signals financial distress.
The company’s profitability fared better with a score of 7 out of 10. While the operating margin is in decline, Mobile Mini is supported by returns that outperform at least half of its industry peers and a high Piotroski F-Score of 7, which suggests business conditions are healthy. It also has a one-star business predictability rank. GuruFocus says companies with this rank typically see their stocks gain an average of 1.1% per year.
With 4.53% of outstanding shares, Singer is the company’s largest guru shareholder. Other top guru investors are Barrow, Hanley, Mewhinney & Strauss, Ken Fisher (Trades, Portfolio), Chuck Royce (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Steven Cohen (Trades, Portfolio).
Carbonite
Having previously exited a position in Carbonite in the second quarter, Singer’s firm entered a new 1.1 million-share stake. The trade had an impact of 0.14% on the equity portfolio. Shares traded for an average price of $17.85 during the quarter.
The Boston-based software company has an $803.74 million market cap; its shares were trading around $22.96 on Tuesday with a price-book ratio of 3.25 and a price-sales ratio of 1.98.
Based on the median price-sales chart, the stock is trading near its historical value.
Carbonite’s financial strength and profitability were both rated 3 out of 10 by GuruFocus. In addition to a low cash-debt ratio of 0.15, the company is weighed down by an Altman Z-Score of 0.53.
The company also has negative margins and returns that underperform over half of its competitors, as well as a low Piotroski F-Score of 3, which suggests it has poor business conditions.
Singer is the company’s largest guru shareholder with 3.15% of outstanding shares. Lee Ainslie (Trades, Portfolio), Royce, Simons’ firm and Paul Tudor Jones (Trades, Portfolio) also have positions in the stock.
Cision
The firm purchased 161,300 shares of Cision, expanding the equity portfolio by 0.01. The stock traded for an average per-share price of $8.62 during the quarter.
The media software company, which is headquartered in Chicago, has a market cap of $1.48 billion; its shares were trading around $9.96 on Tuesday with a price-book ratio of 3.09 and a price-sales ratio of 1.91.
The median price-sales chart suggests the stock is trading below its historical average.
GuruFocus rated Cision’s financial strength 3.3 out of 10 on the back of poor interest coverage and a low Altman Z-Score of 0.69.
The company’s profitability didn’t fare much better, scoring a 4 out of 10 rating. Although the operating margin outperforms a majority of competitors, Cision has weak returns and a moderate Piotroski F-Score of 6. It has also recorded a decline in revenue per share over the past 12 months.
Of the gurus invested in Cision, Ron Baron (Trades, Portfolio) has the largest position with a 4.04% stake. Alan Fournier (Trades, Portfolio), First Pacific Advisors (Trades, Portfolio), the FPA Capital Fund (Trades, Portfolio), Greenblatt and Gabelli are also shareholders.
Additional trades and portfolio composition
During the quarter, the activist firm also boosted its holdings of Marathon Petroleum Corp. (MPC, Financial), Vornado Realty Trust (VNO, Financial), Peabody Energy Corp. (BTU, Financial), Dell Technologies Inc. (DELL, Financial), CommScope Holding Co. Inc. (COMM, Financial) and Roadrunner Transportation Systems Inc. (RRTS, Financial).
Elliott Management’s $11.94 billion equity portfolio, which is composed of 51 stocks, is largely invested in the energy, technology and industrials sectors.
Disclosure: No positions.
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