Activist investing has been brought front-and-center on Wall Street, thanks to its poster boy, Carl Icahn. The 13D Activist Fund (NASDAQ: DDDIX) gives investors access to stocks that have activist investors involved. Instead of buying the fund itself, investors can pick and choose activists’ top picks. Here are the top three holdings for the 13D funds.

1. Become a Pro
With These 3 StocksINVESTING
ACTIVIST

2. Activist investing has been brought
front –and - center on Wall Street, thanks
to its poster boy, Carl Icahn.
A C T I V I S T I N V E S T I N G

3. The billionaire investor has been practicing
shareholder activism since the 70s, when it was
known under a less friendly term, corporate
raiding.
Activist investing hit a new high earlier this year
when Icahn took on one of the biggest companies
in the world. Icahn went toe-to-toe with Apple,
pushing the company to put its cash hoard to
work by boosting its buyback program.
A C T I V I S T I N V E S T I N G

4. However, many
companies have
hedge funds
pushing for
change in order
to boost
shareholder
value.

5. This is still a relatively new
concept for retail investors. But the
13D Activist Fund
(NASDAQ: DDDIX),
which is the only mutual fund that
uses activist investing as its primary
strategy, gives investors access to
stocks that have activist investors
involved.
A C T I V I S T I N V E S T I N G

6. Since its early 2012 inception, the 13D
fund has returned 59 %, compared to the
S&P 500 that’s up 46.5 %. However,
instead of buying the fund itself,
investors can pick and choose activists’
top picks.
Here are the top three holdings for the
13D funds...
A C T I V I S T I N V E S T I N G

7. 1. HOWARD
This real estate company makes up 5.35% of the 13D fund.
This isn’t the sexiest stock you’ll find in the market.
It’s more of a pure real estate play, with a diverse mix of
retail, office, multifamily and resort assets.
(NYSE: HHC)HUGHES CORP.

8. After coming out of bankruptcy,
General Growth decided to focus on
shopping centers, spinning off assets
that require significant development.
Thus, in 2010, Howard Hughes was
spun off from General Growth.
A C T I V I S T I N V E S T I N G
Back in 2008 billionaire Bill Ackman of Pershing Square got
involved with General Growth Properties. He invested for as
low at $ 0.35 a share in 2008.
Source: Insider Monkey

9. And while Ackman's Pershing Square sold all of its
General Growth stock last quarter the fund still has
large part of his portfolio invested in Howard
Hughes. The fund has owned 3.56 million shares
(roughly 9% of the company) for the last few years.
Ackman has even said that his Pershing Square
hedge fund will likely own a part of Howard Hughes
forever.
A C T I V I S T I N V E S T I N G
Horizon Kinetics is a long -term contrarian -focused
fund that owns over 5 million shares, or 13.8% of
Howard Hughes.

10. A C T I V I S T I N V E S T I N G
Again, Howard Hughes is a
long-term real estate play; it
doesn't pay a dividend and is
not a real estate investment
trust. Its key properties
include master planned
communities in Houston, Las
Vegas and Maryland. It also
has operating assets that
generate income, including
various retail and office
properties.

11. Most notably, it owns 60 acres within a mile of
Waikiki Beach and downtown Honolulu. It also
owns the South Street Seaport, which includes a
long-term ground lease with NYC that doesn’t
expire until 2072. The key is that most of its real
estate is on the books at well below market prices.
A C T I V I S T I N V E S T I N G

12. 2. VALEANT
(NYSE: VRX)
Valeant makes up 5.25% of the 13D fund. Valeant is a specialty
pharmaceutical company that has grown to one of the largest
pharma companies in the world, thanks to an aggressive
acquisition strategy.
PHARMACEUTICALS

13. The biggest news for Valeant of late is that it's
teaming up with Bill Ackman's Pershing Square
Capital hedge fund to take over fellow pharma
company, Allergan (NYSE: AGN). Ackman owns
just under 11% of Allergan (28.8 million shares).
Shares of Allergan are up nearly 50% year to date,
while shares of Valeant are flat.
A C T I V I S T I N V E S T I N G

14. The latest bid for Allergan includes $ 72 in cash and
0.83 shares of Valeant stock for each Allegan share.
Ackman’s Pershing Square has said it would accept all
stock for Allergan shares.

15. The move is part of Valeant's strategy to become
one of the world's top five drug makers by 2016.
That means it would have to triple its market cap
in just 18 months. Assuming the Allergan deal
gets done, it would double the size of Valeant.
A C T I V I S T I N V E S T I N G

16. Allergan is pushing back,
not wanting to be
another victim of
Valeant’s acquisition
policy - which includes
large cuts to research
and development to
boost margins. However,
it remains that Valeant
and Allergan’s products
are complementary.
A C T I V I S T I N V E S T I N G

17. A Valeant-Allergan combo would create the No.
2 player in the eye care market and the No. 1 player in
the aesthetics and dermatology markets. Pershing
Square has met with six of the top 10 Allergan
shareholders, all of whom would support a deal that
valued Allergan at $180 a share.
Another notable hedge fund owner is ValueAct Capital,
which owns 5.6% of the pharma company.
A C T I V I S T I N V E S T I N G

18. Billionaire John Paulson has also
jumped in on the merger and
acquisition action. Paulson and his
Paulson & Co. hedge fund have long
been M&A arbitrage specialists.
He bought up $1 billion worth of
Allergan earlier this year. He is
siding with Ackman in the push to
get Allergan bought by Valeant.
A C T I V I S T I N V E S T I N G
Source: Insider Monkey

19. (NYSE: UNT)
CORP.
3. UNIT The 13D fund has
3.72% of its assets
invested in the
company, making Unit
its third -largest
holding. Unit Corp. is an
energy company that
explores for and
produces oil and
natural gas. Despite
being loved by some
key hedge funds, it’s
still an underrated play
on the drilling industry.

20. Only seven analysts are following
the stock. Compare that to the
leading drilling company,
Transocean, which has 25 analysts
covering the company. Royce &
Associates own the most Unit
Corp. shares, right at 6.1 million or
just over 12% of the company.
Dubbed the “small-cap king,”
Chuck Royce runs the various
Royce funds and focuses on
finding undervalued and high -
growth small caps in the market.
A C T I V I S T I N V E S T I N G
Source: Insider Monkey

21. A C T I V I S T I N V E S T I N G
A couple of other small hedge funds are also owners
of Unit, including Heartland Advisors and New
Mountain Capital. Each owns over 5 % of the
company.

22. Despite being up 31% year to date, Unit Corp. is
still a very compelling valuation story. Shares of
Unit Corp. trade at a P/E of just 13, based on next
year’s earnings estimates. That puts its P/E to
growth ratio of under 1.0. This oil and gas driller
also has among the best margins and balance
sheets in the industry.
A C T I V I S T I N V E S T I N G

23. However, it’s likely
trading at this discount
due to being a
conglomerate. The major
hedge fund owners are
looking to make various
changes at Unit Corp.,
including corporate and
capital allocation changes.
This could include breaking
up the company.

24. Unit Corp. isn’t a pure play on oil drilling. It also
participates in exploration and production activities
and has various pipelines. One potential option
includes forming an MLP for its pipeline business.
A C T I V I S T I N V E S T I N G

25. While retail investors don’t get the same access to company
management that large hedge funds and activists do, they can
invest alongside them. The 13D fund has proven to be a solid
vehicle. However, investors can avoid the mutual fund fees
and use the three stocks above for investing like an activist.
A C T I V I S T I N V E S T I N G
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