Jeff Ubben Portfolio: Is It A Winning Strategy?

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Jacob Wolinsky
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We can often hear that life is a journey in many inspirational quotes, and from Jeff Ubben’s example, we can see that it is not just a quote for gathering likes. His initial investment strategy was based on investor activism while in a position at ValueAct. After he left in 2020 he founded Inclusive Capital with the idea of long-term value creation with a focus on ESG factors and sustainability. In this article, we will go through Jeff Ubben’s portfolio and recent events regarding his investment work.We can often hear that life is a journey in many inspirational quotes, and from Jeff Ubben’s example, we can see that it is not just a quote for gathering likes. His initial investment strategy was based on investor activism while in a position at ValueAct. After he left in 2020 he founded Inclusive Capital with the idea of long-term value creation with a focus on ESG factors and sustainability. In this article, we will go through Jeff Ubben’s portfolio and recent events regarding his investment work.

His current portfolio is valued at $5.3 billion and is concentrated in 14 holdings. The largest holding is Salesforce Inc closely followed by Insight Enterprises Inc. KKR & Co (KKR) is in third place, while in fourth is Expedia Group. A recent new addition is Walt Disney Co.

Jeff Ubben’s rich career ranging from Blum Capital to his ValueAct Capital and his newest project Inclusive Capital shows great potential, and vision. Stay with us while we go through Ubben’s long and productive career and his current preferred investment picks.

Key Holdings

  • Salesforce Inc (NYSE:CRM) with 20.68% of the portfolio

ValueAct started investing in Salesforce just a year ago, and it is already showing great promise. They now own 3.5 million stocks, which cost the investor $571 million. In the meantime, the value of the stake rose to $1.1 billion. The problem in the long term could be a high P/E ratio of 115, but for now, ValueAct is making solid returns.

  • Insight Enterprises Inc (NASDAQ:NSIT) with 15.92% of the portfolio

Since ValueAct started investing in Insight Enterprises in Q1 2021 he has been increasing his position. They are currently by far the largest stakeowner with 4.51 million shares. Their total investment is valued at $436 million, while its value grew to $851 million. In three years of investing this holding accumulated a return of 95%. During 2023 and in 2024 the stock value continued with its healthy growth going from $100 at the beginning of 2023 to the current $188.

  • KKR & Co Inc (NYSE:KKR) with 11% of the portfolio

KKR & Co is one of the long-term investments made by Ubben backed up by a theory that their stocks were undervalued. He made a good guess and in five years this holding brought a gain of 106%. Ubben owns a solid chunk of 5.95 million of their stocks valued at $589 million. That value compared to an investment of $286 million is a good deal.

  • Expedia Group (NASDAQ:EXPE) with 10.90% of the portfolio

One of the new acquisitions, Expedia Group, is poised for strong growth, according to ValueAct management. They bought a massive stake of 4.25 million shares which puts them as the largest stake owner in the company. The firm invested $521 million, while the present value of the stake is $582 million resulting in a gain of 12%. Initially after the buy, the stock price skyrocketed from $95 to $155, but it recently lost some of its value stabilizing around $135.

  • Walt Disney Co (NYSE:DIS) with 10.7% of the portfolio

ValueAct investment in Disney comes as a part of the battle for the Disney new board amid a proxy war against Nelson Peltz. While Nelson Peltz is trying to push Bob Iger out of his position and acquire at least two places on the board, ValueAct is siding with the current management. They bought 5.09 million shares at $88 while the P/E ratio is an unfavorable 68.5. For now, the stock price rose to $111, but the proxy war and the new board will have a major impact on the company’s future.

  • Fiserv Inc (NYSE:FI) with 8.96% of the portfolio

Fiserv Inc. was one of the trademark activist investments made by Jeff Ubben. This investment peaked at 14.6 million stocks in mid-2023 and since then the fund has been offloading stocks, and trimming down this holding. One of the reasons could be that the company is satisfied with the gains from this investment. Also, they may think that an activist approach is no longer needed on this occasion. While most of the holding is bought at $94 to $105 they sold it for prices between $110 and $130 generating handsome profits.

  • CBRE Group Inc Class A (NASDAQ:CBRE) with 8% of the portfolio

Long-term value investing resulted in this case with a major payload for Ubben and his investors. He began investing in this real estate giant in 2011 when the stock price was below $20. He piled up tens of millions of stocks while their price fluctuated between $15 and $30. He decided to massively trim down this holding at prices much closer to $100. His total investment was $91 while the current value of his stake is now at $427 million.

  • Spotify Technology SA (NYSE:SPOT) with 5.1% of the portfolio

Spotify is a new holding going back to Q1 2023 and it is already proving its worth. They invested $118 million while the current value of its stake is $271 million generating a gain of 130%. The fund bought 2.25 million shares at $114 per share, while the share value jumped to $263. A negative P/E ratio of 85.9 is not going in their favor, and that is one of the causes why the company decided to cut down costs.

Section Allocation

Ubben’s portfolio is heavily concentrated in the Consumer Discretionary sector supplemented by technology and finance stakes. The current sector allocation is:

  • Consumer Discretionary with 56.7% of the portfolio
  • Technology with 23% of the portfolio
  • Finance with 18.5% of the portfolio
  • Industrials with 0.93% of the portfolio
  • Healthcare with 0.91% of the portfolio.

Jeff Ubben Investment Strategy Analysis

For most of his career in ValueAct Capital, Jeffrey Ubben was known as an activist investor. But, unlike other, often hostile activist investors like Carl Icahn, he prefers to stay in the background and come to terms with the board and top management of the company.
Also, he prefers to keep a quiet and a background influence in the company, then to go all in, and aggressively demand everything to be organized the way he intends to. When he wants to make a change in the company he aims for these specific aspects to be attuned:

  • Appointing new executives
  • Implementation of new deals like acquisitions, divestments, or even selling of the company
  • Other financial moves like balance sheet restructuring, repurchasing of shares, tender offers, or equity offerings.

While in ValueAct Capital Ubben was highly focused on activist investment, and the majority of his acquisitions were so directed. He aims to get a couple of board seats and always files a 13D so he can directly engage with the board of directors and executives.

Ubben avoids proxy contests and prefers to be invited into the boardroom. Once he complains that his goal is to stay there for the long run. He avoids short schemes where he would get what he wants and exit his position.

Take A Look At ValueAct Capital’s Jeff Ubben On Preferring a Long-Term Approach:

Impact Investing and Inclusive Capitalism

Once he left ValueAct to form Inclusive Capital one of the first things he changed was his strategy. His focus was not on generating high returns by changing from inside the company, but more on investing in sustainable companies with high ESG standards.

He saw in renewable energy and upholding high environmental standards the future that he saw for this world. Ubben understood the importance of strong financial performance but he added the overall well-being of a stakeholder into the equation.

But, only after three years, he decided to close his new fund. The main reason was that it was difficult to attract investors. Although many saw what he was trying to achieve, after a period of bad performance, they just wanted to earn money. ESG factors were not a priority anymore. Ubben exited from his latest big investment Exxon in November 2023 marking the end of the era.

One of his comments was that he became anti-ESG. He explained it by pointing out that producing electricity sustainably today would not be anywhere near the current needs of the world.

Further, he explained that current ESG-friendly and sustainable companies are not good enough for the future and that new companies with fresh ideas need to come into the spotlight. He believes that decarbonization is the future and that responsible investors should focus on decarbonization, carbon capture, and blue hydrogen.

Also, he points out that governments should tax carbonization even higher and reinvest it with companies that are offering practical solutions to the problem at hand.

Jeff Ubben Portfolio Performance Analysis

Historical Performance

Between its inception in the year 2000 and 2016, the fund generated annual returns of 15% strongly outperforming the comparable indexes. A slight downturn in 2015 didn’t have a major impact on the fund’s overall performance. The fund performed exceptionally well in 2023 generating 39% returns.

Notable Success

  • Adobe Inc. One of the most successful Ubben’s activist stories. In 2011 he initially bought 5% of Adobe’s stake. The next year he bought up to 12% of the stake in the company, which came with a position on the board. Advisors from ValueAct offered several recommendations for boosting business operations. That led to a share price increase in the long run. Ubben bought the majority of stocks for prices between $26 and $33. The company gained momentum, and in 2016 when Ubben decided to sell, the stock price fluctuated between $80 and $97.
  • MSCI Inc. Another successful activist story is the MSCI Inc. story. In 2013 and 2014 he continuously increased his stake at the company aiming for three spots on the board. He eventually accomplished that and he was able to bring change to a company with several problems. While he was buying stocks they were valued from $28 to $43. When he saw that he achieved his maximum in 2016 he decided to sell. Only then the price was much higher in a range between $68 and $86.

Notable Failures

  • UNIFI, Inc. This is one of the rare failed activist attempts by Ubben. In 2018 and 2019 he constantly piled up their stocks to reach almost 1.5 million. He paid them between $20 and $33. He waited until Q3 2020 to act when he decided to sell the entire stake. The selling price was a mere $12.
  • Alliance Data System. Ubben traded Alliance Data System on two occasions. The first time he completely exited from this position was in 2010 with not ideal results. He again tried to make an impact between 2016 and 2018. He acquired a total of 6.1 million shares at variable values between $208 and $228. He started trimming this holding in Q4 2018 and sold the last stocks in Q1 2020. The stock price varied between $85 and $200.


Is Activist Investor Ubben Shutting Down Inclusive Capital?

Yes, an activist investor Ubben did announce the shutting down of Inclusive Capital, his attempt to impact investing. He pointed to the lack of interest from the investor in his new approach to investing. He aimed to invest in companies and from inside push them closer to high ESG standards.
He tried to make new ESG standards because he believed that old ESG 1.0 standards were outdated. But, he made several bold bets that turned bad. The most important was stakes in Nikola Corporation in 2020, a new manufacturer of electric trucks. But, in 2022 the founder Trevor Milton was convicted of three counts of fraud.
The second bad bet was on the biggest pellet fuel producer in the world – Enviva. He became a member of the board when a certain short seller pointed out in a report that the company was flagrantly greenwashing its wood procurement. Enviva’s share value dropped by 98% in just one year.

Who Is Inclusive Capital Partners?

The founder of Inclusive Capital was Jeff Ubben. Some of his partners were Will Slocum and Eva Zlotnicka.

Final Considerations

Going after your dream should be a priority for everyone. If it includes drawing new borders and setting new standards, that is even better. Jeff Ubben did just that. From the beginning of his career, he attempted to take the maximum from everyone and to achieve praiseworthy results.
When he saw that Blum Capital Partners were not enough for him he founded ValueAct and through it wanted to do some good. Once he saw that he could not do more from there he left and organized Inclusive Capital. His ultimate goal was to work with truly innovative companies that could bring solutions to big problems. However, he couldn’t find enough understanding for his revolutionary view and needed to abandon this ambitious project.
For now, he is active in the Posse Foundation whose goal is to provide student scholarships. What will be his next decision investment-wise is yet to be seen. But, it would not be a surprise if he gets back on the helm of ValueAct.

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Jacob Wolinsky is the founder of HedgeFundAlpha (formerly ValueWalk Premium), a popular value investing and hedge fund focused intelligence service. Prior to founding the company, Jacob worked as an equity analyst focused on small caps. Jacob lives with his wife and five kids in Passaic NJ. - Email: jacob(at) FD: I do not purchase any equities to avoid conflict of interest and any insider information. I only purchase broad-based ETFs and mutual funds.