Delivering Alpha First Blush

Delivering Alpha First Blush

We’ll be back with more insight, for now, here’s how Delivering Alpha has disappointed.

The headline, in terms of activism, has been Jeff Smith and Starboard Value’s stake in Macy’s. It’s a real estate play with 80% upside to $125 a share. He plans on creating a REIT for the 50% of stores its owns – plus 3 flagship stores. A fool’s errand in truth. Smith isn’t versed in companies this large, nor does real estate monetization work. The muppet’s are in full force, with the stock up close to 8%. Will note however – since he went active in Darden the stock’s return is a 20% CAGR. Our thoughts on Macy’s from a couple months ago [link].

Keith Meister at Corvex Management pumped his current REIT holding, American Realty Capital. A company he’s owned for a few quarters, going active at the end of 2014. He tried having a say in who the new CEO would be and demanding a board seat, that didn’t happen, now he’s just hurting to have any dealings with the company. Meister’s last foray in REITs, CommonWealth REIT, was unfruitful. From the time that Meister went active until he sold shares, the stock was flat.

Tom Sandell is back at it – looking to monetize real estate. This time in Ethan Allen. This is his true MO, though it rarely works out for him; Bob Evans anyone? He’s still at work in Brookdale Senior Living. He’s also betting on the debt free company being of interest to PE firms. Ethan Allen really is in no man’s land in terms of furniture, with Restoration Hardware killing it on the top end and cheap foreign furniture makers killing it on the lower end.

Southpoint Capital likes these stocks [Q1 Letter]

Clint Carlson Far ViewSouthpoint Qualified Fund and Southpoint Qualified Offshore Fund returned 2.5% net for the first quarter, compared to the S&P 500's 6.2% return and the Russell 2000's 12.7% gain. During the first quarter, Southpoint's funds averaged 133% long and 70% short. Q1 2021 hedge fund letters, conferences and more The fund's long positions added 13% gross Read More

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