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Glenview Capital increases stake in Fidelity National Financial

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Glenview Capital and Fidelity National Financial

Glenview Capital Management added to its position in Fidelity National Financial (FNF) in the third quarter. Currently, the position accounts for 1.70% of the fund’s total portfolio. The fund added 3,306,600 shares to its existing holding during the quarter.

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Overview of Fidelity National Financial

FNF is the largest title insurance company in the US. It’s also a leading provider of title insurance, escrow, and other title-related services for real estate transactions. Its business is organized into two groups:

  1. FNF Core Operations
  2. FNF Ventures—also known as FNFV (Fidelity National Financial Ventures)

Through its core operations, FNF is a leading provider of title insurance, technology, and transaction services to the real estate and mortgage industries. The company also provides mortgage technology solutions and transaction services. One of the company’s offerings is the MSP (Mortgage Servicing Package). It’s the residential mortgage servicing technology platform in the US. It’s provided through its majority-owned subsidiaries—BKFS (Black Knight Financial Services) and ServiceLink Holdings, LLC.

FNF’s FNFV segment includes a 51% stake in Remy. Remy is a leading designer, manufacturer, re-manufacturer, marketer, and distributor of aftermarket and original equipment components for automobiles, light trucks, heavy-duty trucks, and other vehicles.

FNFV also has a 55% ownership interest in American Blue Ribbon Holdings (ABRH). It’s the owner and operator of O’Charley’s, Ninety-Nine Restaurants, Max & Erma’s, Village Inn, and Bakers Square. This segment also controls casual-dining chain operator J. Alexander’s. It operates the Stoney River Legendary Steaks restaurants.

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Distribution of tracking stock finalized

At the end of June, FNF completed the distribution of its two tracking stocks—Fidelity Group common stock and FNFV Group common stock. Under the plan, the company moved its portfolio company investments to a new subsidiary—FNFV. This was aimed at providing “greater transparency and clarity both to the inherent value of FNF’s portfolio company investments and the cash earnings capabilities of its core real estate, technology and mortgage services businesses.”

Revenue growth driven by technology subsidiary

FNF’s 3Q14 results missed estimates. Core revenue grew to $1.7 billion in the third quarter—compared to $1.6 billion in 3Q13. Adjusted net earnings were up to $145 million—compared to $115 million in the same period a year ago. The company posted core diluted EPS (earnings per share) of $0.51—compared to adjusted core diluted EPS of $0.50 in the same quarter last year. Total revenues for the title segment fell 2%.

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The company said its core revenue growth was driven by technology subsidiary Black Knight. Its revenue increased by 11%. It was led by MSP. The business signed new contracts that are expected to contribute to future organic revenue growth. In a release, FNF said Black Knight’s “sales pipeline remains strong, with numerous MSP, Empower, Closing Insight and Data and Analytics contracts expected over the next several quarters.”

Glenview’s positions in 3Q14

The fund added new positions in Actavis (ACT), Danaher Corp. (DHR), Realogy Holdings Corp. (RLGY), and 21st Century Fox (FOXA). Its top exit was Walgreens (WAG). It raised stakes in Pentair Plc (PNR), Liberty Global Plc (LBTYA), Endo International Plc (ENDP), and Fidelity National Financial (FNF).

The next part of this series will highlight the fund’s exit from WAG.

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