The Morning Brief: Hedge Funds Get Alpha Injection From Allergan Rumors

Hedge fund favorite Allergan surged 6 percent, to close at $304.38, on reports it is engaged in merger talks with Pfizer. If the two drug giants wind up mating, it would be the largest deal in a huge year already for mergers and acquisitions.

In a statement, Dublin-based Allergan confirmed it was approached by Pfizer and is in “preliminary friendly discussions,” adding that “there can be no certainty” that the discussions will lead to a deal. Separately, Allergan said it remains “strongly committed” to completing its planned sale of its global generics business to Teva Pharmaceutical Industries, which it expects to close in the first quarter of 2016.

At the end of the second quarter, Allergan was the largest holding of New York-based Paulson & Company, which was the stock’s eighth-largest shareholder. Allergan has consistently been one of the largest holdings of Greenwich, Connecticut-based Viking Global Investors, the ninth-largest shareholder at the end of the second quarter. At the end of the third quarter, it was one of the 20 largest positions of Lone Cypress, a long-short fund managed by Greenwich, Connecticut-based Lone Pine Capital, and the fourth-largest holding of New York-based Falcon Edge Capital.

However, unfortunately for investors in other beaten down drug stocks, the report of the possible deal did not raise the stock prices of other industry players. For example, shares of Valeant Pharmaceuticals International fell about 4.7 percent on Thursday after surging nearly 7 percent the previous day. Earlier in the day Dow Jones Newswires reported that CVS Health’s Caremark dropped Philidor, the controversial specialty pharmacy linked to Valeant, from its network. After the market closed, published reports said Express Scripts Holding dropped Philidor from its network. Shares of Valeant dropped another 9 percent to 10 percent in after-market trading.


P. Schoenfeld Asset Management sent a letter to the board of directors of NCR Corporation expressing its approval of the tech giant’s decision to de-stagger the board and hold annual elections of directors. It also called on NCR to update shareholders about its plans to boost its stock price.


“Stockholders have been anticipating this update for well over a year,” states the New York hedge fund firm headed by Peter Schoenfeld. It said it owns about 2.4 million shares of NCR, originally called National Cash Register, along with in-the-money call options underlying another 400,000 shares and out-of-the-money call options underlying another 500,000 shares. The letter also lays out a “number of potential paths to value creation,” including selling non-core assets or splitting the company along industry group lines.


Shares of embattled hedge fund favorite SunEdison jumped nearly 7 percent on Thursday, after gaining about 11 percent on Wednesday on news of a licensing deal with solar panel maker Solaria. In its third-quarter letter to clients, David Einhorn’s Greenlight Capital said it is still very bullish on the stock, which was one of its three biggest losers during the period. Greenlight asserts that once the market sorts through certain issues, the alternative energy company will “realize substantial additional value.”


Vinay Pande is the latest partner to leave Brevan Howard Asset Management, according to Bloomberg. Pande headed the London firm’s Brevan Howard Strategic Macro Fund. Bloomberg also reported that Morgan French, a volatility trader, and Owen Job, a strategist and assistant to Brevan Howard partner Ben Melkman, are leaving the firm. Others partners who have recently left the macro firm include Mark Hillery and Matthew James.


Mark Anson was named chief investment officer of Commonfund, effective January 2016. He is now CIO of the Robert Bass Family Office. Before that, he served as CIO of the California Public Employees’ Retirement System. Anson will serve on Commonfund’s operating committee and chair the investment policy and asset allocation committees. Commonfund, with $25 billion in assets, specializes in investing on behalf of nonprofit institutions.