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Hedge Fund Outflows Worst In Years

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Activist news for Apr. 22. Feel free to offer feedback on ideas you’d like. If you want this in your inbox each morning, please sign up here.

Stake changes

  • Viex Capital takes its Emcore stake down 12%. Now owns 6.8%. Sends letter saying they won’t purchase additional shares [letter link]
  • Macellum Opportunity Fund nominates board member for the Christopher & Banks board. Also ups stake by 15% – owns 10.5% and has been pushing for a sale. Been activist since Mar. 2015. Here was Macellum’s letter from last year.

News

  • Sandell Asset Management still hasn’t gotten the separation of Bob Evan’s restaurant and packaged foods businesses. The board has said the sale or spin of BEF Foods wasn’t viable. The Bob Evans director nomination window opens today, which means that Sandell might be ready for another board battle. Sandell ready to make another run at Bob Evans – as part of our premium service.
  • Ashford Hospitality has a new activist Weisman Group. Owns 5.24% and says that it is heartened by recent initiatives announced by management of the company. Weisman continues to believe that the underlying values of the company’s properties and its operations are not adequately reflected by the trading prices of the company’s common stock which remain at meaningful discounts to intrinsic values per share.
  • RTI Surgical activist Krensavage Asset Management, owns 6%, and is hoping the company’s share price increases to at least $10 within three years, if it is successful in replacing the board with its slate of nominees, a source familiar with the fund’s strategy said. Activist says it’s not seeking a sale of the company.
  • PulteGroup Bill Pulte puts out letter publishing a letter saying he will vote against the entire board unless CEO Richard Dugas and Lead Director Jim Postl resign.
  • SunEdison finally filed for bankruptcy. A negative for activist investor David Einhorn who was on the board. However, a positive for yieldcos TerraForm Power and TerraForm Global. According to the yieldcos, they “do not rely substantially on SunEdison for funding or liquidity”. One plan for the TerraForms would be to contract with their utility customers for management of specific projects.
  • Prentice Capital sends another demand letter to bebe. Owns 5.5% [letter link]
  • Broad Lane Capital Management Sends Letter to Board of Directors of Capital City Banking Group [link]
  • Engaged Capital Responds to Benchmark Electronics’ Letter and Presentation to Shareholders [link]

Catalyst watchlist

  • Yahoo gets no bid from the Daily Mail.
  • Qualcomm – Jana Partners target – might be looking to make a bid for Xilinx. Our deep dive look into Qualcomm.

Stories

  • Hedge Funds Suffer Worst Outflows Since Financial Crisis Era [link] Hedge funds suffered the worst withdrawals last quarter since the tail-end of the financial crisis as wild swings in stocks and commodities caused losses at some of the best-known firms. Investors pulled a net $15 billion between January and March, reducing assets under management to $2.86 trillion from $2.9 trillion, Chicago-based Hedge Fund Research Inc. said Wednesday. The last time outflows were higher was in the second quarter of 2009, when $43 billion was redeemed.
  • Hedge funds are targeting gigantic companies [link] There were 30 activist campaigns launched against companies with a market cap larger than $10 billion in 2015, 8% of all activist moves. This is a serious jump from just a few years ago, in 2009 there were only 6 such campaigns which was 2.6% of the total.

 

Other good reads

  • Yahoo! CEO Mayer Says Supporting Strategic Review with ‘Aggressive Calendar’ [link]

Read up on shareholder activism

  • Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors [link]

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