>> LIVE FROM BLOOMBERG WORLD HEADQUARTERS IN NEW YORK CITY, WE ARE TRACKING THE KEY PLAYERS, THE MAJOR MOVES, AND THE CAPITAL FLOWS SHAPING GLOBAL MARKETS. THIS IS "BLOOMBERG DEALS." DANI: WELCOME TO ANOTHER EPISODE OF "BLOOMBERG DEALS." ON TODAY'S EPISODE, WE TALK WITH BLACKSTONE'S JOE BRATTA ABOUT HOW PRIVATE EQUITY IS NAVIGATING M&A IN A VERY VOLATILE MARKET. TODAY WE ARE ALSO FOCUSING ON ACTIVISTS INVESTING AS BILL ACKMAN URGES MERGING U.S..MY EXCLUSIVE CONVERSATION WITH MATT ZIMMER AT WILLIAM BLAIR. LE ...

Core Viewpoint - The current activist situation in the Closed-End Fund (CEF) market could lead to reduced discounts in high-yielding funds, particularly involving GAMCO Investors and Saba Capital Management [2][5]. Group 1: Activist Moves and Fund Performance - GAMCO Investors is attempting to place a vice-president from its Gabelli Utility Trust (GUT) onto the boards of two Saba CEFs, indicating a shift in strategy as GAMCO traditionally manages CEFs while Saba focuses on activism [6]. - GUT has a 10% yield and has achieved an 8.8% annualized return over the past ten years, but it has underperformed compared to the State Street Utilities Select Sector SPDR ETF (XLU) [7][8]. - GUT's total NAV return has outperformed its market price return, but it still lags behind the benchmark's 162% return, indicating management skill may not translate to market performance [10][12]. Group 2: Risks and Comparisons - GUT trades at a high premium to NAV, currently at 83%, which poses a risk of significant losses if the premium collapses [10][12]. - The Saba funds, which hold more speculative assets, currently trade at discounts of around 13.5%, and the potential influence of GUT's management on these funds remains uncertain [13][15]. - The differences in asset focus between GUT and Saba's funds suggest that even if GAMCO's strategy is successful, it may not benefit investors in Saba or BRW [16]. Group 3: Investment Strategy - A recommended strategy is to invest in equity CEFs that are trading at discounts and are managed with a value-oriented approach, such as Central Securities Corporation (CET), which targets undervalued companies [17]. - CET currently yields 5.4% and trades at a roughly 15% discount, making it an attractive option for investors looking for potential activist interest [18][19]. - Focusing on CEFs with wide discounts may provide better opportunities for capitalizing on activist events than attempting to predict specific activist targets [19].

Core Insights - Both Pershing Square Capital Management and Altimeter Capital hedge funds share four common stocks as of December 31, 2025 [1] Group 1: Shared Stocks - Meta Platforms is a significant holding for both funds, with Altimeter holding 18% valued at $1.22 billion and Pershing Square holding 11% valued at $1.76 billion [2] - Changes in positions for Meta include a new investment by Ackman and a 1% reduction by Altimeter, with indications that Meta may no longer be a top holding for Altimeter [3] - Amazon saw a 2% increase in holdings by Altimeter and a 65% increase by Ackman in the fourth quarter [3] Group 2: Other Shared Stocks - Uber's position remained unchanged for Altimeter, while Ackman sold less than 1% of his position [4] - Altimeter increased its GOOGL holding by 66%, while Ackman reduced his positions in both GOOG by 2% and GOOGL by 86% [4] Group 3: Investment Styles - Altimeter Capital focuses on long-term technology investments and invests in both private and public companies, emphasizing "founder-friendly" firms [5] - Ackman is characterized as a value and activist investor, known for acquiring large stakes in companies and advocating for changes to enhance shareholder value [5]

Core Viewpoint - Activist investors Albert Saporta and Randel Freeman are urging Liontrust Asset Management PLC to initiate a strategic review aimed at selling the company due to significant undervaluation and misaligned executive compensation [2][3][10]. Financial Performance - Liontrust's share price has declined approximately 85% from its peak in September 2021, and assets under management (AUM) have fallen from £42.3 billion to around £22 billion, representing a valuation of only 0.68% of AUM [3][6][7]. - The company's share price performance is reported to be the worst among major UK fund management companies during this period [6]. Executive Compensation - CEO John Ions has received nearly £40 million in total compensation since 2010, with £17 million in the last five years, which is considered excessive for a poorly performing small-cap company [7][8]. - The combined compensation of the CEO and CFO amounts to approximately 40% of Liontrust's current market capitalization [8]. Strategic Missteps - The current leadership is criticized for failing to articulate a credible strategy to reverse the company's decline, with a focus on the UK retail market and ESG strategies while lacking a robust alternatives product offering [10]. - The management's past acquisitions have not retained key employees, leading to significant value destruction, with around £280 million spent on acquisitions since 2011, nearly double the current market capitalization [8][10]. Call for Action - The letter from the activist investors emphasizes the need for Liontrust to commence a strategic review and consider selling the company, as it is no longer positioned to act as a serious consolidator in the fragmented asset management industry [10][11].

Group 1 - Elliott plans to engage with Synopsys to enhance profitability from its software and services [1]

Group 1 - Shares of Six Flags Entertainment rose 9% after activist investor Jana Partners urged the company to consider selling itself, although the stock remains 55% below its 52-week high [1][2] - Jana Partners, which holds a 4% stake, expressed disappointment with the company's operational improvements and highlighted issues of board dysfunction and decision-making [2][3] - Other activist investors, such as Sachem Head Capital Management and Land & Buildings Investment Management, are also pushing for changes, including a new board chair and a potential spin-off of real estate assets into a REIT [3] Group 2 - Six Flags has a significant long-term debt of $5.4 billion and a market cap of $1.8 billion, raising concerns about investment risks [4] - The company has taken steps to address its debt issues by selling seven regional theme parks for $331 million and refinancing $1 billion of debt from 2027 to 2032 [4] - Six Flags is currently trading at 10 times earnings before interest, taxes, depreciation, and amortization, which is considered reasonably priced but complex for investment [4]

Core Viewpoint - The article discusses an activist battle involving closed-end funds (CEFs) where a new investor is targeting Saba Capital Management's funds to eliminate discounts to net asset value (NAV), potentially increasing their prices and providing investment opportunities for shareholders [2][12]. Group 1: Activist Investors - Boaz Weinstein is a well-known activist investor who has previously targeted underperforming CEFs [1]. - Saba Capital Management, led by Weinstein, has shifted focus from CEFs to private-credit funds, highlighting the value of CEFs as stable dividend sources [3][4]. - GAMCO Investors, led by Mario Gabelli, is now targeting Saba's funds, aiming to boost their valuations similarly to how Saba has targeted other funds in the past [9][12]. Group 2: Fund Performance - Saba Capital Income & Opportunities Fund (BRW) has a yield of 15.7% but trades at a 15.5% discount, which has been widening [6]. - Saba Capital Income & Opportunities Fund II (SABA) yields 8.6% and has also seen its discount widen due to aggressive investments in cryptocurrencies [7][8]. - Both funds have underperformed compared to the S&P 500 and the VanEck BDC Income ETF, indicating potential issues in their management and investment strategies [5][6]. Group 3: Market Dynamics - The Gabelli Utility Fund (GUT) trades at a 77% premium to NAV, contrasting with Saba's funds, and has benefited from strong performance in utility stocks [10][11]. - Gabelli's strategy involves nominating David Schachter to the boards of Saba's funds, which could lead to a shift in investment strategy and potentially improve performance [12].

Core Viewpoint - Activist investor Jana Partners is urging Six Flags Entertainment to explore a sale and replace its board chair due to concerns about the board's effectiveness in delivering shareholder value [2][3][7]. Group 1: Investor Actions and Recommendations - Jana Partners has called for immediate changes in leadership, specifically the appointment of a new chair for the board, following the recent hiring of a new CEO [4][8]. - The firm holds a roughly 9% economic stake in Six Flags and has previously expressed intentions to improve operations and marketing strategies [5][6]. Group 2: Company Performance and Market Reaction - Six Flags' stock rose nearly 20% following the news of Jana's involvement, although it had previously dropped about 50% year-to-date due to poor weather affecting park attendance [6]. - The company's market value currently stands at $1.7 billion, with shares closing at $16.39 [6]. Group 3: Board Concerns and Criticisms - Jana's letter highlights issues such as delayed communication regarding the new CEO's appointment and the board's inconsistent financial guidance, which has contributed to a lack of confidence among investors [9][10]. - The letter describes a pattern of dysfunction within the board, indicating a need for significant changes to restore effective governance [7][9].

Core Viewpoint - CoStar Group, a major player in the commercial real estate sector, is currently facing pressure from activist investors while company insiders are actively purchasing shares [1] Group 1: Activist Pressure - CoStar Group is engaged in a conflict with two activist investors [1] - Daniel Loeb, CEO of Third Point, criticized CoStar Group's board as "feckless" in a letter addressed to the company [1] Group 2: Insider Activity - Despite the ongoing activist pressure, insiders at CoStar Group have been buying shares [1]

Core Viewpoint - Activist investors are targeting Norwegian Cruise Line and TripAdvisor, aiming to address operational inefficiencies and enhance shareholder value through strategic changes. Norwegian Cruise Line - Norwegian Cruise Line (NCLH) has a market cap of $11 billion and recently saw a 10% stake acquisition by activist investor Paul Singer of Elliott Management, who criticized the company's poor execution and cost controls [2][4] - Elliott Management is advocating for a new board with more travel experience and a stronger CEO, following the appointment of a new CEO with a background in the restaurant industry [3] - The company is projected to achieve over $4 billion in adjusted EBITDA by 2027, with potential for significant upside due to its modern fleet and favorable industry conditions [4] - Norwegian Cruise Line is the smallest of the major public cruise operators, focusing on the luxury market, which may allow for cost reductions through staff optimization [5] TripAdvisor - TripAdvisor (TRIP) has a market cap of $1.2 billion and has recently attracted a 9% stake from activist investor Starboard Value, which criticized the company's slow adoption of AI technologies [7][8] - Starboard Value plans to nominate its own board members at the upcoming annual meeting and suggests that TripAdvisor should consider a sale [8] - The stock has lost approximately 75% of its value over the past five years and over 80% in the last decade, indicating challenges in monetizing its platform effectively [9][10] - With a low forward P/E ratio of 7.5, TripAdvisor may be an attractive investment opportunity, although the risk of disruption from AI remains a significant concern [10]