Vanguard, BlackRock increase stake in Compass

SoftBank’s piece of brokerage now valued at just $307M

Vanguard's Mortimer Buckley, Compass' Robert Reffkin and BlackRock's Larry Fink (Getty, Vanguard, Compass)
Vanguard's Mortimer Buckley, Compass' Robert Reffkin and BlackRock's Larry Fink (Getty, Vanguard, Compass)

Vanguard and BlackRock have upped their stake in Compass in the third quarter, which was otherwise a lukewarm period for institutional investor activity in the brokerage.

The two major money managers led a pack of 76 institutional investors — defined as firms managing $100 million or more — that have bought additional shares in Compass, according to an analysis by The Real Deal of Securities and Exchange Commission filings and Nasdaq data.

Firms that increased their positions in the brokerage collectively acquired 30.9 million shares.

Vanguard last quarter bought 6.3 million shares in Compass, building its stake in the brokerage to nearly 9 percent from 7.4 percent. Even with the increase, the value of its shares in Compass dropped from $115.6 million to $88.9 million during the quarter.

BlackRock, the world’s largest money manager, likewise increased its exposure to Compass stock as the value of its holdings plunged. During the third quarter, BlackRock bought another 3.8 million shares, increasing its stake to nearly 4 percent from 3 percent. The shares’ value, however, dropped to $39.7 million from $115.6 million.

Not all institutional investors kept the faith.

A total of 71 reduced their exposure to the stock in the third quarter, collectively offloading 27.4 million shares. The biggest transactions involved Discovery Capital Management and the New York State Common Retirement Fund, whose sole trustee is the state comptroller, Tom DiNapoli.

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Discovery, which sold 844,411 shares, now has an $11.4 million stake in Compass. Meanwhile, the retirement fund, a pension plan for state government workers, shed 622,241 shares, dropping the value of its holdings in Compass to just $425,000.

Institutional investors collectively own 292 million shares, or around two-thirds of Compass. During the third quarter, 40 firms left their positions in the brokerage unchanged, including its largest shareholder, SoftBank, which stood pat with 132.4 million shares.

In August, SoftBank disclosed that the value of its Compass investment, which totaled $1.08 billion over three funding rounds, had dropped to $543 million.

Its latest SEC filings show that it has taken more losses. In the third quarter, SoftBank estimated the value of its stake in Compass at $307 million, down from $477.8 million during the previous quarter.

Twenty-eight firms took new positions in Compass, led by J. Goldman & Co., which reported an acquisition of just under 1 million shares. Another 28 firms divested their stakes. The largest selloff involved Wasatch Advisors, which sold its more than 4 million shares in the brokerage.

Compass’ opening-day stock price, on April 1, 2021, was $20. At the time the latest disclosures were filed, on Sept. 30, its stock price was at $2.32. At close of trading Nov. 17 it was $2.95. The company disclosed a net loss of $154 million in the third quarter.