The Morning Brief: Hedge Funds Lose Porsche Lawsuit
A German court ruled against a consortium of hedge funds that were seeking about $7 billion in a lawsuit against Porsche Automobil Holding SE. The funds claimed the automaker lied during its failed attempt to acquire Volkswagen AG in 2008. However, the Stuttgart Regional Court dismissed the lawsuit, filed by 23 hedge funds, according to Bloomberg BusinessWeek.
Among the plaintiffs were Viking Global Equities LP, Glenhill Capital LP and Greenlight Capital. The hedge funds claimed they were misled when Porsche denied throughout 2008 that it intended to acquire Volkswagen. In October 2008, Porsche built a 74.1 percent stake in Volkswagen, in part through options, and wanted to acquire 75 percent as part of a takeover strategy. When Porsche announced the stake, Volkswagen’s shares surged as short sellers scrambled to cover their positions, buying shares to repay borrowed stock.
“There was never a guarantee that Porsche wouldn’t change its mind and decide the next day to do the takeover,” Judge Carola Wittig reportedly said, stressing that not every piece of “misinformation” entitles a plaintiff to collect damages.
Shares of hedge fund favorite Hertz Global Holdings surged nearly 5 percent Monday on a Financial Times report over the weekend that the car rental giant is planning to separate its Hertz Equipment Rental Corp. in a deal that would value the business at about $4.5 billion. We recently noted that at year-end, Hertz ranked fifth among stocks that appear most frequently among the top ten holdings of fundamentally driven hedge fund portfolios, according to a study conducted by Goldman Sachs.
Meanwhile, shares of TripAdvisor, one of a few high-flying stocks that hedge funds have dismissed, surged another 1.5 percent after Deutsche Bank raised its price target to $122 from $92, which it says reflects higher multiples given peer group expansion and pricing trends. “We see a compelling multi-year opportunity ahead for TripAdvisor,” it adds in a note sent to clients, a sentiment most hedge funds apparently don’t share. The stock, however, is up more than 25 percent year-to-date.
John Lykouretzos’s Hoplite Capital Management disclosed its owns 5.99 percent of SunEdison, Inc., a solar technology manufacturer.
The Credit Suisse Hedge Fund Index rose 1.72 percent in February, reversing the prior month’s loss and bringing its gains for the first two months of the year to 1.42 percent. The best performing sub-strategy was event-driven multi-strategy, up 3.08 percent in February and 3.32 percent for the year. Meanwhile, long-short equity is up 2.80 percent for the year, while dedicated shot bias is off 4.71 percent for the first two months.