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Morning Brief: Facebook Reveal Spooks Investors

The social media giant’s stock tanked after the New York Times reported that voter-profiling company Cambridge Analytica lifted user data without their permission.

  • By Stephen Taub

Facebook rocked the stock market — and hedge fund managers — on Monday after the New York Times reported that voter-profiling company Cambridge Analytica, which has close ties to President Trump, harvested the private information of 50 million Facebook users without their permission. Shares of the social media company fell 6.8 percent, to close at $172.58, pulling down many hot-shot tech stocks as well as the Standard & Poor’s 500 stock index, which fell 1.4 percent. The tech-heavy Nasdaq dropped 1.8 percent.

Facebook is the most widely-held stock among hedge funds, with at least 265 reporting a position at year-end, according to portfolio analytics and research firm Novus. Investors and other critics called on Facebook founder Mark Zuckerberg to address the report on Monday. At the close on Friday, Facebook’s stock had surged 60 percent since December 1.

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Claire’s Stores is the latest specialty retailer to file for bankruptcy. The company said it obtained $135 million in debtor-in-possession (DIP) financing, including an asset-based lending facility and a term loan from Citigroup Global Markets. The retailer said its restructuring plan has the support of holders of about 72 percent of the company’s first lien debt, led by Elliott Management Corporation and Monarch Alternative Capital, 8 percent of its second lien notes, and 83 percent of its unsecured notes, according to the company’s press release. The first lien creditors have agreed to provide $575 million of new capital, including financing commitments for a new $75 million asset-based lending facility, a new $250 million first lien term loan, and $250 million as a preferred equity investment.

“This transaction substantially reduces the debt on our balance sheet and will enhance our efforts to provide the best possible experience for our customers,” Claire’s chief executive officer Ron Marshall said in a press release.

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Tiger Global Management participated in the $61.6 million Series E financing of Grogers, an Indian on-line grocery company. This is Tiger Global’s fourth investment in the company, according to crunchbase.com. Altogether Grogers has raised $226.5 million.

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Credit Suisse cut its price target on activist target Babcock & Wilcox Enterprises from $4.30 to $3.50. In a note to clients, the bank pointed out that the power generation company recently disclosed it had received a subpoena from the Securities and Exchange Commission related to an investigation into accounting charges and related matters to its renewable segment in 2016 and 2017. Even so, the company launched its previously announced rights offering on Monday. The company also recently said it has received “substantial interest” in two of its business lines, and it expects to close a deal in mid-2018. Activist investment firm Steel Partners recently boosted its stake in the company to 14.8 percent, paying between $5.59 and $6.08 per share for its most recent purchase of 700,000 shares.

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