Farallon Capital starts new positions in MSFT, CMCSA, TWC, SPRD and sells AZO, PFE—13F Flash D
Farallon Capital starts new positions 3Q 2013 (Part 4 of 6)
Farallon Capital Management, LLC, is a global institutional asset management firm founded in 1986 by Thomas Steyer. It invests globally across asset classes, seeking superior risk-adjusted returns through bottom-up fundamental analysis that emphasizes capital preservation. While its investment philosophy remains consistent, its execution is flexible, allowing capital to shift among strategies, asset classes, and geographies based on prevailing opportunities. Farallon is headquartered in San Francisco and has offices in London, Singapore, Hong Kong, Tokyo, and São Paulo.
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Farallon started new positions in Microsoft Corp. (MSFT), Comcast Corp. (CMCSA), Time Warner Cable (TWC), and Spreadtrum Communications (SPRD) and it sold positions in AutoZone Inc. (AZO) and Pfizer Inc. (PFE).
Why buy Spreadtrum Communications (SPRD)?
Spreadtrum Communications entered into a merger agreement on July 12 with Tsinghua Unigroup Ltd., a solely state-owned limited liability corporation funded by Tsinghua University in China, under which Tsinghua Unigroup will acquire all of the outstanding ordinary shares of Spreadtrum for $31.00 per American Depositary Share. The merger values Spreadtrum’s equity at approximately $1.78 billion on a fully diluted basis. Shareholders have approved the deal, which is awaiting regulatory approval.
Spreadtrum reported a 56.1% increase in total revenue to $293.3 million in 3Q 2013 year-over-year. In 3Q13, smartphone products accounted for 73% of chipset revenue while feature phone, modem, and other products accounted for 27% of chipset revenue. The company saw growth in both single-core and dual-core chipsets for low-cost smartphones. Its smartphone growth was driven primarily by an increase of shipments of both single-core and dual-core EDGE smartphone chipset for overseas markets. It launched a WCDMA/HSPA+ smartphone chipset for the global market that’s currently shipped to China and other markets.
According to news reports, by acquiring fabless semiconductor companies Spreadtrum and RDA Microelectronics (RDA), Tsinghua Unigroup aims to consolidate the fabless chip industry in China—especially the market for low-end devices. The consolidated group may have a competitive advantage against companies such as Taiwan’s Mediatek or China’s Allwinner Technology and Rockchip Electronics.
Spreadtrum is a fabless semiconductor company that develops mobile chipset platforms for smartphones, feature phones, and other consumer electronics products, supporting 2G, 3G, and 4G wireless communications standards. Spreadtrum’s customers include China-based and global manufacturers developing mobile products for consumers in China and emerging markets around the world.
Farallon
Farallon manages approximately $19 billion for institutions, including college endowments, charitable foundations, pension plans, and high–net worth individuals. According to its website, Farallon pursues multiple investment strategies on an opportunistic basis, which includes five core investment strategies: credit investments, value investments, merger arbitrage, real estate–related investments, and direct investments. Each investment is evaluated independently on a fundamental basis.
Farallon invests globally, focusing on both developed and emerging markets. It invests in public and private debt and equity securities and direct investments in private companies and real estate. It prioritizes preserving capital. While it values and employs risk management analytics, it primarily manages risk through rigorous research and analysis. It also seeks to build strong relationships with the management of the companies it invests in.
Farallon Capital Management founder Thomas Steyer attended Philips Exeter Academy and graduated from Yale University. He received his MBA from Stanford Business School, where he was an Arjay Miller Scholar. He announced in October 2012 that he would be stepping down from his position at Farallon in order to focus on political activism—in particular, advocating for alternative energy.
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