Hedge funds bought into Precision before Buffett arrived

By Svea Herbst-Bayliss

BOSTON (Reuters) - Legendary investor Warren Buffett was not the only one to turn sweet on Precision Castparts Corp this summer.

A handful of prominent money managers, including billionaire activist investor Barry Rosenstein, placed big new bets on the aerospace supplier during the second quarter, just weeks before Buffett swooped in to buy the entire company.

Buffett's plan to pay $32.3 billion for the Precision Castparts Corp, announced on Monday, helped push the stock price up nearly 19 percent this week, likely making for a handsome payoff for the funds that took new positions or raised stakes.

Buffett had been a long-term investor before deciding that he liked the company so much that he had to own the whole thing, making for the biggest takeover ever for his Berkshire Hathaway Inc.

Rosenstein's roughly $11 billion Jana Partners bought 2.5 million shares during the quarter, according to a regulatory filing released on Friday. Jana Partners gained 1.3 percent through the end of July, one investor said. The fund was sure to have gotten a shot in the arm from the bump in Precision's share price.

While Rosenstein is by far the biggest new stakeholder, he was not alone in coming in at a time the company's stock price had been falling. The share price, which is still down about 4 percent this year, had fallen roughly 17 percent during the first half.

Davis Selected Advisers took a new stake with 2 million shares, Hitchwood Capital Management established a new position by buying 800,000 shares. New bets were also made by Holland Capital Management which bought 344,616 shares and Samlyn Capital which owned 224,160 shares at the end of the quarter. Taconic Capital Advisors opened a new position with 110,000 shares.

Fund managers are required by U.S. regulators to say what they owned at the end of each quarter and those so-called 13-F filings, while backward looking, can often illustrate new investment trends and hint at who won and lost in the secretive hedge fund industry.

In addition to the newcomers, other prominent hedge funds poured more money into Precision Castparts during the second quarter, raising the stakes they already owned.

Soroban Capital Partners bought 706,600 shares to own 3.2 million shares. It also bought call options on 1 million shares.

Farallon Capital added 232,299 shares, boosting its stake to 949,299 shares.

But not everyone was convinced of the company's future prospects, and some took money off the table. Victory Capital Management sold 34,575 shares, cutting its stake to 810,134 shares.

(Reporting by Svea Herbst-Bayliss; Editing by David Gregorio)

You May Also Be Interested In

• Analysis-Biden unlikely to cut Iran's oil lifeline after Israel attack
• Analysis-Biden unlikely to cut Iran's oil lifeline after Israel attack
• Analysis-Biden unlikely to cut Iran's oil lifeline after Israel attack