Anand Parekh set his Chicago-based hedge fund Alyeska Investment Group into motion back at the start of 2008, borrowing the title from an Aleut word that translates to “big country,” setting high expectations for the success to come. Between Alyeska’s founding and now, the firm has managed to continue to grow, yielding positive returns year-after-year, even while confronting market dips its first two years.
This can be a testament to Parekh’s quick wit, with a market neutral strategy-minded mentality that helped him to manage between $2 and a half to $3 billion just three years after Alyeska was put into drive. Operating from long and short positions alike, the fleet-footed marathon runner’s sharp synapses have led Parekh from global head of equities at Citadel Investment Group to a well-respected hedge fund guru in his own right.
How did Parekh’s Alyeska size up giants Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Amazon.com, Inc. (NASDAQ:AMZN), and Facebook Inc (NASDAQ:FB) in the fourth quarter? Let’s dive in:
Valeant Pharmaceuticals Intl Inc
According to the most recent SEC filing, Parekh takes a gamble on Valeant, boosting 11% of his hedge fund’s holding in VRX to 1,510,494 shares worth $21,932k. Perhaps as a marathon runner, the hedge fund guru sees value in running the long game, choosing to look back the biotech giant’s near-term winded financial struggles.
Valeant continues its de-levering strategy of slackening assets for dollars to attack its debt load full-throttle. Yet, shares for the troubled biotech giant stumbled almost 7% last Wednesday after rumors broke of challenges selling its iNova subsidiary.
While Valeant allegedly has expectations to sell iNova for $1 billion, bids have been coming up short, circling $900 million, a hefty $100 million short of Valeant’s asking price.
Wells Fargo analyst David Maris opines, “To us, this is another disappointment in what was promised to be $8 billion worth of asset sales that so far has only been approximately $2 billion. It is also not surprising given we believe the recent debt refinancing is a sign that near term asset sales of significant value are not at hand, given in our experience, we would expect a company that had potential near-term asset sales to complete those sales and pay down debt rather than refinancing first…We believe the shares probably anticipated this news given the recent weakness and note for investors that the shares are close to breaking a critical psychological price point of $10. We would not be surprised to see the shares fall through this in the near-term, as we believe management has not yet demonstrated a turnaround.”
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst David Maris is ranked #631 out of 4,560 analysts. Maris has a 55% success rate and garners 11.9% in his annual returns. When recommending VRX, Maris yields 56.3% in average profits on the stock.
TipRanks analytics exhibit VRX as a Hold. Out of 14 analysts polled by TipRanks in the last 3 months, 3 are bullish on Valeant stock, 9 remain sidelined, and 2 are bearish on the stock. With a return potential of nearly 61%, the stock’s consensus target price stands at $15.40.
Alyeska takes a step back on the online auction and e-commerce leader, reducing its holding by 31% to 32,171 shares worth $24,124k. While Parekh still clearly sees Amazon as a worthwhile investment, he also recognizes reason to get more cautious.
Amazon has been captivating investor attention following last Thursday’s revealed M&A deal to take over Plug Power, Amazon’s footsteps into the fuel cell arena.
The Amazon/Plug collaborative deal will take Plug’s fuel cells and hydrogen tech GenKey facilities to bolster Amazon’s fulfillment network, which will enable AMZN’s industrial muscle to grow even stronger and more efficient. With a claim to potentially owning 20% of the fuel cell maker, Plug’s success down the line will also now be partially Amazon’s as well.
Plug buzz has certainly put Amazon and the fuel cell market at the forefront spotlight. Time will tell if Amazon’s power play proves as valuable as other investors contend.
TipRanks analytics demonstrate AMZN as a Strong Buy. Based on 29 analysts polled by TipRanks in the last 3 months, 27 rate a Buy on Amazon stock, 1 maintains a Hold, and 1 issues a Sell. The 12-month average price target stands at $971.40, marking a nearly 9% upside from where the stock is currently trading.
Alyeska decides now is the time to bet on Facebook, initiating a stake of 172,787 shares in the social media giant worth $19,879k. Parekh must be encouraged by Facebook’s proactive steps to not just assess the fake news issue, but handle it with proactive steps, a sign of a company that has the tools to succeed for the long-term.
Last Thursday, Mark Zuckerberg’s brainchild Facebook decided to tackle the bad fake news publicity plaguing the tech-verse with a new box titled “tips for spotting fake news,” encouraging users spanning 14 countries across the globe to identify “genuine” stories. Facebook’s “Help Center” offers 10 pieces of advice to assess what news stories could be spreading false information, from deciding whether the site reporting seems “unfamiliar” to simply “look[ing] at other reports” to fact-check the information.
Considering Zuckerberg’s giant had come under fire for spreading fake news in a tense political climate, it makes sense for the social tycoon to take steps to alleviate the threat of added criticism.
In addition to a publicity problem, Facebook also could stand to fall under financial strain in Europe, considering last week’s bill approved in Germany indicating social networks could face up to a 50 million euro fine should fake news linger too long online.
TipRanks analytics show FB as a Strong Buy. Out of 37 analysts polled by TipRanks in the last 3 months, 35 are bullish on Amazon stock while 2 remain sidelined. With a return potential of nearly 15%, the stock’s consensus target price stands at $161.76.