Activist Investing Doesn’t Work On The Short Side by Activist Stocks

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Activist Investing – Stake changes

  • JCP Investment ups its US Geothermal stake by 18%. Now owns 7.2% of the company and been activist since Feb. Full disclosure: Long. We have a deep dive into U.S Geothermal as part of Activist Strategy – get a free trial here.
  • Viex Capital continues to reduce its GSI Tech stake. Been activist since Jan. 2015. Sold 12% of its stake of late. Now owns 4.9%.
  • Greenlight Capital sells off 60% of its SunEdison stake. Was activist since Jan. Now owns 2.8%. Fears over a bankruptcy have now pushed SunEdison shares to below $0.50. But as I’ve said before, don’t sleep on David Einhorn.

News

  • United Airlines and the two hedge funds that have gone activist on the name are close to a settlement. PAR Capital and Altimeter Capital have waged a proxy battle and the settlement would give them some of the board seats they’re pushing for, including a new chairman. They own 7.1%.
  • Elliott Management comes out in support of the Polycom and Mitel Networks merger, which it has been pushing for all along. It owns 6.6% of Polycom and 9.7% of Mitel. Elliott’s Jesse Cohn says that the move makes financial and strategic sense – creating a company that can generate an enormous amount of free cash flow. Elliott is now turning its attention to getting Cabela’s sold.
  • 7-Eleven parent, Japan-based Seven & i Holdings, says it has selected Dan Loeb of Third Point’s preferred candidate for its new president. 58-year old Ryuichi Isaka who helped drive 7-Eleven store growth takes over, this comes as 82-year old chairman Toshifumi Suzuki retired. Recall – Dan Loeb says the economy is just fine.
  • Comments from Starboard Value on DepoMed; owns 9.9%: Remains convinced that meaningful board change is required at Depomed. It’s determined to continue its current process to call a special meeting to remove and replace current board members.

Catalyst watchlist

  • Lawyers for Energy Transfer Equity says they are unable to deliver tax opinion for Williams merger; meaning deal might not be tax-free.

Stories

  • Activists’ Bearish Bets Fall Short [link] Looking out over a longer time frame, stocks of companies targeted by activist short investors since the start of 2013 declined 19.6 percent on average over the life of an investment, according to Activist Shorts Research. During the same period, the S&P 500 outpaced those returns by roughly 26 percentage points.
  • Activist Hedge Funds Wounded by Former Shale-Boom Star [link] Activist investors TPG-Axon Capital and Mount Kellett Capital each lost more than $150 million in SandRidge Energy’s decline

Other good reads

  • The process of selling Yahoo has ‘been a f—ing joke’ [link]
  • Seven & I Appoints Activist Investor Loeb’s Candidate as Group President [link]
  • Red Mountain Issues Letter to Fellow iRobot Shareholders Responding to Baseless and Personal Attacks [link]
  • YuMe Files Definitive Proxy and Sends Letter to Stockholders [link]
  • Sessa Capital Sends Letter to Ashford Hospitality Prime Shareholders [link]
  • Valeant CEO Deposed for at Least Nine Hours by Senate Committee [link]
  • What Activist Investors Should Know About the ValueAct HSR Lawsuit [link]
  • BILL PULTE TAPS A HIGH-POWERED ACTIVIST ATTORNEY [link]
  • Rovi, TiVo Try to Bridge Difference on Valuation [link]
  • The Gap Keeps Making the Same Fashion & Corporate Mistakes [link]

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Activist Investing Doesn't Work On The Short Side