ValueAct Capital: Latest To Drink The Rolls-Royce Kool-Aid

ValueAct Capital: Latest To Drink The Rolls-Royce Kool-Aid

ValueAct Capital is now Rolls-Royce’s largest shareholder, with a 5.44% stake. They join a swarm of hedge funds making a push toward the aerospace industry. The airline engine marker has GreenWood Investors touting it of late [link] and Andvari sent a letter to Rolls [link].

Also, here’s John Hempton’s recent thoughts on Rolls Royce [link] and of course the Sequoia letter that takes Rolls to task [link].

Rolls already has a new top dog that’s already made comments about rehauling the business. Some enlightenment on the potential divesting that could take place at Rolls:

This Tiger grand-cub was flat during Q2 but is ready for the return of volatility

Tiger Legatus Master Fund was up 0.1% net for the second quarter, compared to the MSCI World Index's 7.9% return and the S&P 500's 8.5% gain. For the first half of the year, Tiger Legatus is up 9%, while the MSCI World Index has gained 13.3%, and the S&P has returned 15.3%. Q2 2021 hedge Read More

If anything, the marine business which is suffering from the downturn in the offshore oil and gas industry, might need more investment, he said. “It has probably been underinvested in. Probably we need to increase the competitiveness of that business with increased research and development spending.”

Mr East’s comments may dismay some investors who have called on the group to focus on its core civil aerospace division. Rolls-Royce has been criticised for withdrawing from the booming market for single-aisle passenger aircraft to focus on the lower volume but higher margin widebody segment [link]

ValueAct also has a starter position in another aerospace play, Precision Castparts.


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