Bloomberg News

Asian Hedge Funds Widen Bets on Micron, Sprint Amid Mergers

August 20, 2014

Asia-based hedge funds added shares in Micron Technology Inc. (MU:US) and Sprint Corp. (S:US) in the second quarter, amid a spurt of corporate activities involving global technology and telecommunications companies.

Azentus Capital Management Ltd., helmed by former Goldman Sachs Group Inc. proprietary trader Morgan Sze, increased the telecommunications portion of its 13F holdings by 20 percent in the second quarter, according to data compiled by Bloomberg. Carl Huttenlocher’s Myriad Asset Management Ltd. raised its 13F holdings of technology stocks by 31 percent and telecommunications securities by 13 percent.

Azentus and Myriad, both based in Hong Kong, have been spotting trades in wireless carriers and chipmakers. Global communication and technology companies have been involved in $711 billion of mergers and acquisitions this year, more than double the value a year earlier, according to data compiled by Bloomberg.

“The appetite is being driven by themes such as industry growth expectations, high operating leverage businesses and, more conspicuously in 2014, a global spike in merger and acquisition activity,” Ben Williams, regional head of financing sales at Bank of America Corp.’s Merrill Lynch unit.

Asian Consumers

Julie Chang, Azentus’s investor relations officer, and Scott Gaynor, Myriad’s chief operating officer, declined to comment on their investments. Asset managers disclose their ownership of U.S.-traded securities in a Form 13F filing with the Securities and Exchange Commission.

Myriad, whose Chief Investment Officer Huttenlocher headed Highbridge Capital Management LLC’s Asia business, oversees about $3 billion. Azentus manages about $700 million, said a person with knowledge of the matter.

Myriad owned an $8.7 million stake in Micron, the largest U.S. maker of memory chips, as of June 30, the filing showed. It bought 93 percent of the shares in the quarter. Azentus boosted the number of Micron shares it owned by more than 50 percent to a holding worth $36 million, according to its filing.

Micron acquired (MU:US) bankrupt Japanese rival Elpida Memory Inc. in July 2013. It announced in June third-quarter profit and sales that exceeded (MU:US) analysts’ estimates as an industry glut eased and corporate demand for computers bolstered prices. Its stock price has surged 49 percent this year through Aug. 19.

Sprint, T-Mobile

Azentus also bought shares in Sprint and T-Mobile US Inc., the third- and fourth-largest U.S. mobile phone carriers, which held talks to combine their businesses. Sprint is controlled (S:US) by Japanese billionaire Masayoshi Son’s SoftBank Corp.

Azentus sold the shares in both companies in the first half of July after Sprint’s share price decline (S:US) made it too costly to complete the merger, said a person with knowledge of the matter. Sprint ended the talks in early August, citing regulatory concerns. Its stocks price tumbled (S:US) 34 percent since July 15 through Aug. 19.

Azentus also bought $12 million worth of American depositary receipts of VimpelCom Ltd. (VIP:US) The wireless carrier and Hutchison Whampoa Ltd., controlled by Asia’s richest man Li Ka-shing, revived talks to merge their wireless assets in Italy. VimpelCom’s ADRs have gained 13 percent since this year’s low in mid-May.

Taking Profits

Tybourne Capital Management (HK) Ltd., led by former Lone Pine Capital LLC Asia head Eashwar Krishnan, bought shares in Amazon.com Inc. (AMZN:US), online restaurant and local business review services provider Yelp Inc. and Internet streaming services company Netflix Inc. in the quarter, according to its latest filing. It held $484 million worth of shares in the companies, its three largest 13F holdings, it showed.

Tybourne, which oversees more than $2.6 billion in hedge and long-only funds, disclosed more than $1.1 billion of 13F holdings at the end of June. Tanvir Ghani, its COO, declined to comment on its investments.

Azentus and Myriad took profit by trimming stakes in 21Vianet Group Inc. (VNET:US) The ADRs of China’s largest web data-center operator doubled in the past year and are valued (VNET:US) at 33 times analysts’ estimate for next year’s earnings, compared with 21 times on May 9, according to data compiled by Bloomberg.

In other industries, Azentus added Mead Johnson Nutrition Co., amid speculation that the baby-formula maker is a likely takeover target of Danone SA (BN), Europe’s second-largest food company. Danone is trying to jump start growth after first-half earnings fell 20 percent and to rebuild its position in China, where its infant-nutrition unit has been hurt by a product recall and bribery claims.

Myriad also declared a $4.2 million Herbalife Ltd. holding at the end of June, according to its filing. It was part of a convertible bond arbitrage strategy instead of a bet on the stock itself, said a person with knowledge of the matter.

To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net

To contact the editors responsible for this story: Andreea Papuc at apapuc1@bloomberg.net Tomoko Yamazaki


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Companies Mentioned

  • MU
    (Micron Technology Inc)
    • $31.63 USD
    • -0.85
    • -2.69%
  • S
    (Sprint Corp)
    • $6.88 USD
    • 0.03
    • 0.44%
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