Magnetar initiates activist stake in Orbitz Worldwide
In March 2015, Magnetar Capital purchased 6.27 million shares of Orbitz Worldwide, Inc. (OWW), giving the hedge fund a 5.6% stake in the company. Orbitz was established in 2000 through the partnership of major airlines. It’s a leading travel management company that allows consumers to plan their travel online by booking flights, hotels, car rentals, travel insurance, vacation packages, and other travel products.
According to Magnetar Capital’s 13D, the position was initiated after the announcement of the merger between Expedia Inc. (EXPE) and OWW. Close to 4.9 million shares are in the form of call options held by three managed accounts for Magnetar’s clients. The remaining 1.3 million shares are held by Magnetar’s PRA Master Fund.
To protect itself from any downside risk, Magnetar simultaneously took up a short position in approximately 2.0 million OWW shares. The fund intends to utilize its position in the PRA Master Fund to vote in favor of the proposed merger.
You can gain exposure to OWW through the SPDR S&P Retail ETF (XRT), which has a portfolio weighting of 1.32%.
Established in 2005 by Alec Litowitz and Ross Laser, Magnetar Capital has grown by more than five times in terms of assets under management. The hedge fund currently manages assets in excess of $12 billion and seeks to generate active returns by deploying its global event-driven, fixed-income, and energy strategies across multiple asset classes.
In our recent series based on the fund’s fourth quarter 13F, we saw that the fund’s investments were principally centered in energy stocks that represent more than 60% of its portfolio value. Magnetar’s chief positions included Spectra Energy (SE), Williams Companies (WMB), Cheniere Energy (LNG), Plains Group Holdings (PAGP), Anadarko Petroleum (APC), Halliburton (HAL), and TransCanada (TRP), among others.
In the next part, we’ll look at the proposed merger between OWW and EXPE.