Abrams Capital Buys DIRECTV, Moneygram; Reduces CST Brands

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Abrams Capital Management reported that its equity portfolio has a market value of around $1.93 billion based on its 13F filing with the Securities and Exchange Commission (SEC) for the fourth quarter of 2014.

David Abrams is the hedge fund manager of Abrams Capital Management. He is Baupost cub who became a billionaire. Since 2009, Abrams has been in the top three percent of hedge fund managers.

Abrams Capital new stock positions

During the fourth quarter, Abrams Capital acquired stock stakes in DIRECTV and Moneygram International.

Abrams Capital bought 700,000 shares of DIRECTV worth approximately $60.69 million. DIRECTV is scheduled to release its financial results for the fourth quarter on Thursday, February 19.  During the previous quarter, the company posted adjusted earnings pf $1.33 per diluted share on $8.4 billion in revenue.

For the fourth quarter, Wall Street analysts are expecting DIRECTV to achieve average earnings of $1.40 per share on $8.91 billion in revenue. The company managed to deliver better-than-expected earnings therefore investors are anticipating a similar performance for the latest quarter.

The shareholders of DIRECTV approved AT&T’s $48.5 billion merger deal in cash and stock. The deal is expected to close in the second quarter of this year, according to AT&T CEO Randall Stephenson.

The shares of DIRECTV closed $87.51 per share on February 13. The stock traded between $71.67 and $89.46 per share over the past 52-weeks. The company gained more than 21% in stock value over the past year.

Abrams Capital purchased 2,313,090 shares of Moneygram International, a global money transfer and payment services company. Its stake in the company has a market value of more than $21 million.

The shares of Moneygram International plummeted almost 9% to $8.61 per share on February 13. The company posted disappointing operating earnings of $0.17 per share compared with the $0.19 per share consensus estimate. Its revenue for the quarter was $349.6 million, a 9.4% decline from $385.8 million in the same period in 2013.

According to Moneygram CEO Pamela Patsley, the company’s financial performance for the fourth quarter was impacted by strong competition in the United States. The analysts covering the stock have a consensus Hold rating for the stock with an average 12-month price target of $12.61 per share.

Abrams Capital increased stock positions

Abrams Capital increased its stockholdings in Covidien by 330,000 shares to 2,950,000 shares. Its stake in the company has a market value of around $301.72 million. The stock is its largest stockholding, which accounts 13.41% of its equity portfolio.

During the period, Abrams Capital also bought additional 1,527,519 shares of InterXion Holding to 2,347,788 shares. The hedge fund’s stake in the company has a market value of around $116.29 million.

Abrams Capital reduced positions

During the fourth quarter, Abrams Capital reduced its position in CST Brands by 1,073,624 shares. The hedge fund still owns 2,666,680 shares worth around $116.29 million.

Abrams Capital also sold 69,200 shares of Rayonier Advanced Materials to 2,430,000 shares. Its stake in the company is worth approximately $54.2 million.

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