Nearly fifty hedge funds sold over half a billion dollars of shares in Altice USA in the third quarter, according to filings, as the cable company continues to suffer from concerns over its debt level. Altice USA, the second-largest US initial public offering this year to date, raised $1.9 billion from investors in June. Its shares rose on its debut but have struggled since, falling 38 percent and sinking to an all-time low.
Parent company Altice NV ousted its chief executive on November 10, with billionaire founder Patrick Drahi returning as president in a bid to reassure investors after its shares slumped 30 percent in a week. The company's debt pile of nearly 50 billion euros ($58.95 billion) has been a concern for investors, and has been publicly criticised by French President Emmanuel Macron. Forty-nine hedge funds reduced their stakes in Altice USA in the third quarter, according to a Reuters study of 13F filings for the three months ending September 30 and disclosed to US regulators in mid-November.
Of those funds, 37 have exited their stakes entirely, including London-based hedge fund firms Naya Management and Arrowgrass Capital Partners as well as US manager Millennium Management. "The problem with a really levered company is that if something falls heavily and more than you think, is that the cushion isn't very big," said a partner at one of the 37 hedge fund firms that had exited their stakes. "People get scared when the chart starts going the wrong way. People leave the sinking ship very quickly."
The 23.6 million shares sold over the quarter by funds represent one third of those issued during Altice USA's IPO, and were valued at more than $640 million at the end of September. Around one third of the total were sold by Lone Pine Capital, which exited a position of 8.4 million shares that was worth $271 million dollars on June 30, according to the filings. Other funds to close their positions over the period include George Soros' Soros Fund Management and Steven Cohen's Point72 Asset Management.
Altice USA's IPO has been viewed as a vehicle for Drahi to expand his cable empire by giving Altice USA public stock it can use as a currency to finance acquisitions. A spokesman for Altice declined to comment.