Prominent investors stock up on eBay, then activists
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[February 15, 2019]
By Svea Herbst-Bayliss
NEW YORK (Reuters) - EBay Inc.'s stock
price slumped for most of last year but a number of prominent hedge
funds were so convinced that change is on the horizon for the e-commerce
company that they established new or added to existing positions in the
last months of 2018.
Baupost Group, run by Seth Klarman, and BlueMountain Capital both made
new investments while Hudson Bay Capital Management and Adage Capital
Partners expanded their bets with sizable purchases during the fourth
quarter, regulatory filings and data compiled by Symmetric.io show.
Banking giants UBS AG, Citigroup Inc, JPMorgan Chase and Morgan Stanley,
which invest for retail and institutional clients, also purchased
millions of new shares, the data show.
For these investors, the nearly 30 percent gain in eBay's share price in
the first seven weeks of trading this year represents a sizable windfall
that was likely fueled by behind-the-scenes moves of two activist hedge
funds that also built stakes recently.
Elliott Management, one of Wall Street's busiest and successful
activists, said in its regulatory filing that it made a new bet on eBay
in the fourth quarter, listing call options on 8.5 million shares. In
January, Jesse Cohn, a partner at Elliott and head of its U.S. Equity
Activism, wrote to eBay's board to urge a sale of StubHub ticketing and
its classified-ads business, forecasting that doing so could help push
the stock price to as high as $63 a share in 2020. It closed at $36.32
Starboard Value, another prominent hedge fund which has won more board
seats through settlements than others, also built a stake and contacted
management, people familiar with the move said, even though eBay was not
listed on Starboard's filing.
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The eBay app is seen on
a mobile phone in this illustration photo October 16, 2017.
Starboard did not respond to questions about the position.
The 13-F regulatory filings that require fund managers to detail the
amount of stock they held in U.S. companies at the end of the previous
quarter often do not require filers to disclose derivatives, which means
an investor can build a position without its showing up on this filing.
Ebay on Thursday announced a restructuring plan that will unite
geographic regions under a global segment and said that a senior
executive, Scott Cutler, will leave.
Baupost's 13-F filing shows that it bought 21 million shares of eBay in
the fourth quarter, making the company one of eBay's top five U.S.
To be sure, there were also hedge funds that backed away. Larry Robbins'
Glenview Capital Management, which boasted a 17 percent gain in January
after losing 16 percent last year, sold 4.4 million eBay shares, cutting
its position by 37 percent.
(Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler)
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