Jeff Ubben’s ValueAct Capital has some of the best long-term returns in the hedge fund game. Everybody loves him. Hell, I love him (no hedge fund homo). He really is a class act.
But at some point, everyone must pay the piper.
Style drift is real folks. And it will kill your fund. Just ask David Einhorn and Greenlight Capital. Learn from the best, even if it is painful as hell to watch.
After getting raped by Valeant Pharmaceuticals, Ubben’s fund is now down on the year. Shares of Valeant aredown 39% year-to-date. The fact that Rolls-Royce is down 32% YTD doesn’t help either. Hell, let’s not forget 21st Century Fox, down 22% YTD too. Then there’s Baker Hughes – down 16% in six month.
What the hell is Ubben doing in all these pieces of shits? More importantly, what’s the culprit of this fund fuckery at ValueAct?
At first glance it’s a bit of style drift, but that’s the pussies’ answer. Hell, let’s chalk it up to Ubben losing his edge, investing in shit he has no clue about, and settle in at home with some Natty light and Domino’s.
But you’d be a fucking fool.
Short answer: Don’t bet against Ubben; buy every name in his portfolio.
Long answer: Ubben’s right in his wheelhouse. His portfolio is on point in terms of his historical, beastly return-generating, setup. Looking back to 3Q 2006, ValueAct had 43% invested in tech, 25% healthcare and 6% energy. Today, 33% is in tech, 16% healthcare and 15% energy. It’s not style drift, but some gangnam style machinations going on at some of his top holdings.
First — Ubben was in Valeant back when many of you were still shitting on yourselves, and still up multiples from his single digit purchase price. Valeant is a cluster fuck right now though. Nobody in the company knows what’s going on. Mike Pearson says he doesn’t think there’s any fraud going on. Ubben’s partner at ValueAct, Mason Morfit, is back on the board to try and sort this shit out.
As for the other detractors, Ubben’s said it before — ValueAct invests in companies undergoing “change.”
Rolls-Royce is a company amidst a “change.” Many question what insight Ubben can bring to an industrial company like Rolls-Royce. Where Ubben is mainly known for his technology sector prowess.
Clearly, you’re forgetting his follies at Gardner Denver, Rockwell Collins, MSCI — all with holding period CAGRS of 20% to 50%.
Ubben is going to get the Rolls-Royce marine division spun out, with or without Warren East.
21st Century Fox is bit different for Ubben. What I know of Ubben, he’s interested in getting his hands dirty with companies that aren’t properly addressing fundamental industry change. Fox is an ideal example, getting raped by the likes of Netflix.
But at his core, Jeff Ubben is a mother fucking headhunter. Industry dynamics aside, the CEO guillotine is his go-to move.
Rupert Murdoch’s old ass was gone from Fox shortly after Ubben showed up, just like Ubben kicked that crazy fucker Steve Ballmer to the curb at Microsoft.
Ubben will have his blood.
I really think Ubben has been dreaming about a fight with Ken Chenault too. If American Express, where Ubben owns a smallish stake, loses out on this Starwood and Marriott merger, Ken will find himself spending some time on LinkedIn doing some updating.
Then of courese there’s Baker Hughes. What the hell is Ubben doing with stakes in Halliburton and Baker Hughes? He’s not an oil man, you say. Well you clearly don’t remember Dresser-Rand, where he booked a 47% CAGR.
He’s going to force Halliburton into doing whatever is necessary to get approval for the Baker Hughes’ buyout. Baker Hughes’ shares still have 20% upside before hitting the offer price. Antitrust doesn’t stand a chance here.
Remember, when interviewing for his first job at Fidelity Investments, Ubben followed Peter Lynch into the bathroom to pitch a stock.
Relentlessness is the truest of virtues. Don’t bet against Ubben.
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