Seth Klarman, founder and president of the Baupost Group which has returned 20% annually to investors, bought a stake in Vivendi (VIVHY, Financial), a major subscription-based digital entertainment company. Klarman’s Baupost Group owns 25,500,000 shares of Vivendi, or 2.04% of the company, as of Feb. 29, 2012.
Vivendi’s stock declined almost 42% over the last year and 22% year to date. In 2011, the company’s adjusted net income increased 9.4% year over year due to a turnaround at its Universal Music Group and excellent performance of Activision Blizzard and GVT, as well as the purchase of the remaining shares of SFR, its mobile-phone unit, from Vodafone in June.
Earlier in the year, Vivendi sold for more than $30 per share, higher than 2011 book value of $24.65 per share. The company also has a dividend yield of 9.9% and generated almost $5 billion in cash flow. It trades for a low P/E of 5.
On April 9, Klarman gave up on a large investment in Targacept (TRGT, Financial). He had purchased 6 million shares of the company at about $11.50 per share in the fourth quarter of 2011, and took at least a 30% loss when he sold out in the next quarter. The company’s share price had dropped significantly on news that it revised top-line results from its Phase 2 clinical study of asthma drug TC-6987.
This year Vivendi is planning to begin VOD service in Germany which could rapidly expand across Europe. It wants to set up a Netflix (NFLX, Financial)-style service where users pay a flat fee for unlimited access to streaming video content. The company is also seeking a replacement for CEO of SFR, its French mobile business, after it lost numerous clients to new competition.
Vivendi’s stock declined almost 42% over the last year and 22% year to date. In 2011, the company’s adjusted net income increased 9.4% year over year due to a turnaround at its Universal Music Group and excellent performance of Activision Blizzard and GVT, as well as the purchase of the remaining shares of SFR, its mobile-phone unit, from Vodafone in June.
Earlier in the year, Vivendi sold for more than $30 per share, higher than 2011 book value of $24.65 per share. The company also has a dividend yield of 9.9% and generated almost $5 billion in cash flow. It trades for a low P/E of 5.
On April 9, Klarman gave up on a large investment in Targacept (TRGT, Financial). He had purchased 6 million shares of the company at about $11.50 per share in the fourth quarter of 2011, and took at least a 30% loss when he sold out in the next quarter. The company’s share price had dropped significantly on news that it revised top-line results from its Phase 2 clinical study of asthma drug TC-6987.
This year Vivendi is planning to begin VOD service in Germany which could rapidly expand across Europe. It wants to set up a Netflix (NFLX, Financial)-style service where users pay a flat fee for unlimited access to streaming video content. The company is also seeking a replacement for CEO of SFR, its French mobile business, after it lost numerous clients to new competition.
