Hedge fund Sachem Head built CVS stake during second quarter

By Svea Herbst-Bayliss

NEW YORK (Reuters) – Investment firm Sachem Head Capital Management built a new stake in CVS Health Corp (NYSE:) during the second quarter when the healthcare company’s stock price dropped roughly 25%, according to a regulatory filing made on Wednesday.

The firm, run by Scott Ferguson, owned 2.45 million shares, or 0.20% of the company, on June 30, the filing showed.

A representative for Sachem Head did not comment on what the firm’s plans are for the investment, which is one of the hedge fund’s biggest along with ZoomInfo Technologies and Twilio (NYSE:).

Speculation has mounted among fund managers that an activist investor may swoop in to push CVS to make changes that would boost its share price. Since January, CVS’ stock price has dropped 31% while the broader market has climbed roughly 15%.

Sachem Head, which settled a proxy fight with US Foods Holding (NYSE:) Corp two years ago, also cut back its holding in the stock by nearly 30% during the quarter.

The company remained Sachem Head’s biggest U.S. investment on June 30, with a holding of 9.7 million shares, which was a 4% stake in the company. This week, Sachem Head said in a new filing that it had further cut its US Foods investment to roughly 5 million shares, a 2% stake in the company.

Investment managers are required to tell regulators how much stock they owned in U.S. companies at the end of each quarter in so-called 13F filings. While the filings are backward looking, other investors watch them closely for hints on trends, including suggestions of which companies activist investors might be targeting.