ValueAct’s Actions at the Dawn of Disney Deal

If you happened to be watching CNBC’s exclusive interview with Jeffrey Ubben the other day, you’d think there’s nothing special going on at the moment. Ubben is calmly discussing his decision to leave the board of 21st Century Fox directors just as Disney is preparing to seal the deal.

These are exciting times we are living in. After all, this is going to be one gigantic merger if it happens, because we are indeed talking about giants in the industry. Two incredible household names are going to become one, i.e. Disney is close to closing the $52.4 billion deal any minute now. However, as it is the way with all things in life, it’s not going as smoothly as planned. Supposedly, Comcast is willing to bid $60 billion for 20th Century Fox studio, the Fox regional sports networks, and the FX cable channel. ValueAct’s CEO and founder, Jeffrey Ubben, is delighted with the Disney offer, but it remains to be seen what the summary of the whole event is going to be like.

In case you didn’t know it,  ValueAct is an extremely successful hedge fund (mildly speaking), which has their people in lots of boards of directors, and such is the case with FOX, too. Ubben is pretty satisfied with this successor and speaks highly of Mason while avoiding to explain what exactly was the reason to leave the board and move on to other tasks. However, he will stay on as his confidant.

In the meantime, as told by Reuters, ValueAct Capital Partners invested over 1 billion in Citigroup Inc. on the basis of it being low risk, reliable, and almost perfect (no changes were indicated or suggested). They also trusted  SLM Corp’s student lender Sallie Mae with around 1 billion dollars. While the Citigroup’s shares showed an increase,  SLM still shows little difference on the market.

As opposed to the whole world speculating and discussing the famous merger, ValueAct continues to act quietly and starts to concentrate on banking business. According to them, the future lies in banking, and the time is now because this would be the most perfect (safest) time to invest. As you’re reading this, ValueAct has about 40% of its capital invested in the financial sector. Ever since its inception in 2000, ValueAct has obtained 14.6% a year for its flagship fund (after fees), which is quite impressive for the industry.

Citigroup Inc. could return around 50 billion cash to shareholders in the upcoming two years, which is  $10 million more than the original forecast predicted. This particular bank seems reliable after the careful inspection of their deadlines and receipts. In addition, Citigroup isn’t keen on investing in risky ventures, which ValueAct decided to see as an advantage.

If you wish to read a bit more about the greatest investments and challenges of the famous hedge fund, go to CNBC’s interview. Their CEO has some interesting thoughts on corporate behavior, social media, and technology. Also, you’ll see which are ValueAct’s new targets. Considering the profit-maximizing history, their investments seem like a safe bet.

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