You may not have heard of Cacti Asset Management, but it is no tumbleweed. Cacti has more than $1.2 billion in investments.
The Atlanta-based fund is most heavily weighted in financials (22.7%), industrials (19.5%), consumer discretionary (15.1%), information technology (14.5%) and health care (13.3%), according to S&P Capital IQ.
Cacti disclosed position changes in the fourth quarter that stem from its concentration in industrials. It takes some spine to increase holdings in General Electric (ticker: GE) while cutting back on GE venture Baker Hughes a GE Co. (BHGE). Cacti also cut positions in Exxon Mobil (XOM) and Siemens Gamesa Renewable Energy (GCTAF), a Spanish firm formed from the combination of wind-turbine operations of Siemens (SIEGY) and Gamesa. Cacti also initiated a position in Vivint Solar (VSLR).
The fund added 10,000 GE shares in the fourth quarter to bring holdings to 101,650 shares at the end of the year. The battered shares of the conglomerate were easy pickin’ in the quarter as they slid to a six-year intraday low of $17.25 on Dec. 28. We recently suggested selling puts to offset shares purchased at higher prices.
Cacti sold 12,700 shares of Baker Hughes in the fourth quarter, cutting its position to 318,900 shares at Dec. 31. We reported in early December that activist holder ValuAct’s Baker Hughes had dwindled, removing an uncertainty for the GE venture. In fact, Baker Hughes shares rose 6.4% in December.
The fund’s investment in Exxon Mobil slipped to 397,940 shares as of Dec. 31, down from 418,335 at Sept. 30. We noted that the company has bowed to shareholder pressure and will disclose more about potential valuation adjustments to its energy reserves due to climate-change regulations.
Cacti unwound some of its Siemens Gamesa position, lowering holdings to 48,000 American depositary receipts at Dec. 31 from 62,000 ADRs at Sept. 30. The ADRs caught some uplift in the fourth quarter, rising 4.2%, but still ended 2017 with a 25% drop.
The stars didn’t exactly align for Vivint, a residential solar provider, in 2017. At one point they more than doubled before melting. They ended 2017 with a gain of 4%. We recently noted that “Vivint has consistently lost money and run negative gross margins.” They don’t seem to be selling points for the stock, but that didn’t stop Cacti from buying 10,000 shares in the fourth quarter.
With these investment adjustments, Cacti is banking on a GE rebound and a sunnier day for Vivint. If those don’t materialize, the fund hopes to endure a drought as well as its namesake.
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