The Morning Brief: Judge Questions Leon Cooperman’s Bid to Have Charges Tossed

A judge questioned Leon Cooperman’s bid to have his insider trading charges thrown out. Lawyers for the founder of Omega Advisors argued the charges were too vague, according to the Wall Street Journal. However, the paper stressed U.S. District Judge Juan Sanchez did not signal how he would rule on the request. The judge did ask both Cooperman and the Securities and Exchange Commission to go to trial before next year. Last year the SEC brought civil charges of illegal insider trading and other securities violations against Omega.


KKR and Pacific Alternative Asset Management Company have agreed to merge. It’s the latest big tie-up in the struggling fund-of-funds industry, which continues to shrink in size amid mediocre returns and other factors.

Under the deal, PAAMCO, which manages over $10 billion in discretionary assets and advises on an additional $14 billion in assets, will merge with KKR Prisma, which has about $10 billion of assets under management, mostly in liquid alternatives investments. The new firm will focus on these liquid alternative products. Under the deal KKR will retain a 39.9 percent stake in a newly-merged company, PAAMCO Prisma Holdings.

Interestingly, the announcement stresses the deal is “not a monetization event” for PAAMCO or Prisma’s management or for KKR. Under the agreement, the new business will be led by co-CEOs Jane Buchan, co-founder and CEO of PAAMCO, and Girish Reddy, co-founder of KKR Prisma.


Sachem Head Capital Management’s Scott Ferguson and one other will resign from the board of directors of Autodesk under an agreement between the activist hedge fund and the maker of 3-D design software. Sachem Head also agreed to continue until June 2018 its earlier standstill and voting agreement provisions. At the same time, Autodesk announced that Carl Bass resigned as president and chief executive officer, effective February 8. The company’s board has launched a search for a replacement. The two directors will step down on the later of the 2017 annual meeting or the appointment of a new CEO. According to the announcement, Bass and Autodesk’s board began discussing a potential CEO transition more than 18 months ago as part of a CEO succession plan. When Sachem Head began buying shares in the company in late 2015, Bass and the board put discussions about a permanent successor on hold.

Back in March, Autodesk named three new directors to its board under a settlement reached with the two firms. One of the three directors was Ferguson, who also became a member of the board’s compensation and human resources committee. As of the end of the third quarter, 26 percent of Autodesk’s market capitalization was held by hedge funds, making it the second-most-concentrated hedge fund stock. Eminence Capital was the third largest shareholder, while Sachem Head was the fifth largest. Soroban Capital Partners, the sixth-largest shareholder at the time, in October boosted its stake to 8 percent, making it the third-largest shareholder. This transaction was disclosed in a 13G filing, suggesting it is a passive investment.


Allison Transmission Holdings agreed to repurchase ValueAct Capital’s entire stake of more than 10.5 million shares for $34.50 per share. The transaction is expected to close on or about February 8. As part of the deal, Gregory Spivy of ValueAct Capital will not stand for reelection. He will be replaced by William Harker of hedge fund firm Ashe Capital Management, which agreed to a customary standstill agreement. The repurchase was executed under Allison’s $1 billion stock repurchase program, authorized by the board in November 2016.


The average hedge fund got off to a good start in January. The HFRI Fund Weighted Composite Index rose 1.2 percent last month, the strongest beginning to a calendar year since 2013, when the index rose by 2.5 percent, according to HFR. Equity hedge strategies led the way, gaining 2.1 percent for the month, driven by strong gains from growth, technology and healthcare sub-strategies.