The Morning Brief: Energy Transfer Equity to Acquire Activist Favorite Williams

Call this a case of winning the battle but losing the war…at least for now. After a one-year pursuit, Energy Transfer Equity has finally hammered out a deal to acquire activist hedge fund favorite Williams in a merger of oil pipeline companies valued at $37.7 billion. This should be good news for Keith Meister’s New York-based Corvex Management, the second largest Williams shareholder (with 5.57 percent of the shares at the end of the second quarter), and New York-based Soroban Capital Partners, the fourth-largest investor in the company.

In 2014, Corvex and Soroban, headed by Eric Mandelblatt and Gaurav Kapadia, reached an agreement with Williams in which Mandelblatt was appointed to the board of directors. Other major holders also include Stephen Mandel Jr.’s Greenwich, Connecticut-based Lone Pine Capital. However, most investors are giving the deal a resounding thumbs down, as the stock Monday fell more than 12 percent, to close at $36.56. Williams is now down 40 percent since late June alone.


Williams is not the only activist target to take a beating on Monday. Valeant Pharmaceuticals International, the acquisitive drug giant, plunged 16.50 percent on Monday to close at $166.50. Valeant has been a favorite among hedge fund firms, especially the Tiger crowd and the activists, for several years. They include Jeffrey Ubben’s San Francisco-based ValueAct Capital, Valeant’s fourth-largest shareholder, which took its initial stake back in 2006. However, it sold nearly one-quarter of its position in the second quarter.

On the other hand, William Ackman’s New York-based Pershing Square Capital Management took its initial stake of nearly 19.5 million shares in the second quarter, which made it the third-largest shareholder. Other top shareholders include New York-based Paulson & Co. and two Greenwich, Connecticut-based Tiger Cubs: Lone Pine and Viking Global Investors.


Recent hedge fund hot stock SunEdison has entered a new free-fall. Shares of the renewable energy company fell another 18 percent on Monday and are now down nearly 80 percent since late June. The stock is one of the biggest holdings of David Einhorn’s New York-based Greenlight Capital, which in turn is the company’s largest shareholder as of the end of the second quarter. Other top-10 holders include New York-based Third Point; Greenwich, Connecticut-based Lone Pine; New York-based Omega Advisors; and New York-based Fir Tree Partners.


Not everyone lost money during Monday’s market meltdown. At least two high-profile hedge funds benefitted from betting against the shares of Glencore, whose stock plummeted 29 percent after investment bank Investec questioned the level of debt held by the Swiss mining and commodities-trading giant.

“In the current climate, debt is fast becoming the most important consideration,” Investec analysts Hunter Hillcoat and Marc Elliott wrote in a note, according to Bloomberg. “Glencore may have to undertake further restructuring.”

According to the wire service, London-based Lansdowne Partners and San Francisco-based Passport Capital have the largest short positions on Glencore’s stock. The stock is down 75 percent from its November 2014 high.


Marjorie Kaufman has joined New York-based activist hedge fund manager Barington Capital Group as a partner in charge of marketing and investor relations. Her mission is to boost Barington’s client base in the family office and institutional markets, according to a press release. She previously was managing director and head of marketing at Guggenheim Global Trading, a multistrategy hedge fund that was recently re-named Deimos after a management buyout. She was previously managing director with Golden Seeds and managing director and head of marketing and investor relations with Kingdon Capital. Barington is headed by James Mitarotonda.


Clifton Robbins’ Blue Harbour Group boosted its stake in Agco Corp. by nearly 40 percent. As a result, the Greenwich, Connecticut-based activist investor now owns 7.5 percent of the farm equipment manufacturer.