The Value Investing Congress had fewer high-profile speakers this time, however, Starboard Value’s Jeffrey Smith, ValueAct Capital’s Jeff Ubben and Marcato Capital’s Mick McGuire were worth noticing because of their recent activist runs.
VIC: Jeffrey Smith on beauty of toilet papers
Jeffrey Smith touted Wausau Paper Corp. (NYSE:WPP) in his presentation today, and it was not the first time he has talked about the investment. In today’s conference, Smith was quoted as saying, “toilet paper is a beautiful, beautiful business”. This was Starboard’s latest activist run, where Smith got two of his nominees successfully appointed to the company’s board in March this year. For the year, shares of Wausau Paper Corp. (NYSE:WPP) are up nearly 45 percent. In response to pressures from hedge funds, Wausau has periodically divested of its non-core operations in the printing and paper business. Over the last three years, while Starboard has increased its position from 6 percent to 15 percent of the company, Wausau has become a pure play tissue business now, thanks in part to Smith’s continued demands.
In today’s presentation, Smith also said that the company needs to change its name since they are not producing paper anymore. Smith also wants the company to buy back stock and issue dividends.
Since Smith is almost done with the changes he wanted at Wausau, he is now focusing on Emulex Corporation (NYSE:ELX). He did not discuss the position in his presentation today, however the activist investor sent a letter to the company’s board in which he said that Emulex is extremely undervalued. Starboard bought 5.2 million shares of the company in last quarter.
VIC: Ubben on Bing/Google and value in reinsurance business
Jeff Ubben of ValueAct Capital, fresh from his success at dethroning Steve Ballmer from his executive seat at Microsoft Corporation (NASDAQ:MSFT), also spoke at VIC today. The interesting part of his presentation was his snide remark aimed at Microsoft’s Bing search engine. In response to a question about what he thought of Google Inc. (NASDAQ:GOOG), Ubben replied, “Google is interesting…I’ll say one thing: they’re lucky Bing is in the business.” There is some speculation that Ubben is pushing Microsoft to sell its underperforming search engine, however, Ubben did not reveal ValueAct’s further plans for Microsoft, saying that he could not comment on the position as “there were things going on there.”
Ubben pitched Willis Group Holdings PLC (NYSE:WSH) in today’s conference, which is a reinsurance company. He said that WSH has a much better business model compared to the new players in the reinsurance industry. We know that several hedge funds have set up their reinsurance shops in past years, these include Greenlight Capital Re, Ltd. (NASDAQ:GLRE), SAC Capital Re and most recently Third Point Reinsurance Ltd (NYSE:TPRE) which debuted on market on Aug 14.
ValueAct holds 18.2 million shares of the company, the fund has been invested in Willis Group Holdings PLC (NYSE:WSH) since 2009.
VIC: McGuire Bullish on United Rentals
Earlier, we did a full profile on Mick McGuire’s activist runs since he founded his hedge fund, Marcato Capital. Today when he spoke at VIC, he pitched United Rentals, Inc. (NYSE:URI), which is the fund’s third largest position according to 13f filed for Q2. Marcato bought a new position in United Rentals in Q2, the fund holds 3.57 million shares of the equipment rental company which is a 3.8 percent position.
McGuire said that cyclical trends were pointing in United Rentals’ favor these days. He also said that the company could benefit from increased renting of equipment rather than buying, as economic recovery is still in its early stages. McGuire thinks that acquiring RSC Holdings Inc. (NYSE:RRR) would make URI the second-largest rental company after Hertz Global Holdings, Inc. (NYSE:HTZ). We wouldn’t be surprised if McGuire takes up his position in United Rentals and pushes for the acquisition.
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