This content is from: Portfolio

Morning Brief: Keith Meister Trims Stake in Energen

Corvex sells shares after a court ruled against the firm holding a special shareholder meeting to push for changes on Energen’s board.

Keith Meister’s Corvex Management has reduced its holding in Energen Corp. following an Alabama federal district court ruling that went against the activist hedge fund.

According to a January 3 filing with the Securities and Exchange Commission, Corvex has trimmed its Energen stake to 9.9 percent, from 10.10 percent on September 14, selling 80,294 shares. The fund’s investment has gained more than 14 percent based on its average purchase price of less than $52 per share.

Corvex first took an activist stake in the company, which has a market value of about $5.7 billion, in August, and immediately began pushing for a change of board directors. The hedge fund firm said it would call for a special shareholders’ meeting if necessary. Energen sued, and the court agreed with the company, saying in a November ruling that Corvex could not call a special shareholder meeting. Corvex said it would appeal the decision.

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Bill Ackman, along with other senior members and advisors of his Pershing Square Capital Management, plan to invest $300 million in Pershing Square Holdings, the firm’s publicly traded hedge fund listed on the London and Amsterdam stock exchanges. The fund, which trades at a steep discount to its net asset value, jumped more than 3 percent on the news in European trading Wednesday.

Ackman is buying the shares because he believes they are undervalued, according to a January 2 statement from Pershing Square Holdings. The purchase should “assist in reducing the discount to net asset value at which PSH’s public shares currently trade,” the firm said. Before the announcement was made, Pershing Square shares closed Tuesday at $13.67 on London’s Euronext. That compares with the fund’s NAV of $17.41.

Pershing Square is selling part of its stake in Howard Hughes, the real estate company whose board Ackman chairs, to help buy the Pershing Square shares. Although the European fund will divest of Howard Hughes, Pershing Square will still own 5.1 percent of Howard Hughes’ common shares, and its total economic interest through derivatives will be 17.9 percent, down from 23.4 percent today.

Pershing Square Holdings ended 2017 down 4 percent, its third consecutive year of losses. The firm has $9.3 billion of assets.

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A former executive at Izzy Englander’s Millennium Management will finally get to start his own hedge fund, ExodusPoint Capital Management, according to a news report from Bloomberg. Michael Gelband, the former head of credit at Millennium Management, has resolved a hiring dispute with Englander, which will allow him to open his own hedge fund, Bloomberg said, citing sources familiar with the situation. Another former Millennium executive, Hyung Soon Lee, who headed equities until October 2016, is a co-founder of the new firm.

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A former top executive of Och-Ziff Capital Management has been charged with fraud more than a year after the firm pled guilty to bribing African officials. The U.S. Attorney in Brooklyn filed the charges against Michael Cohen, the former head of Och-Ziff’s European operations who was in charge of the African business, according to an indictment made public Wednesday. Cohen was charged with 10 counts, including conspiracy to commit investment adviser fraud, wire fraud and obstruction of justice.

Och-Ziff and four executives, including Cohen, had been previously charged by the SEC over corrupt practices in Africa. Och-Ziff paid $412 million in U.S. criminal and regulatory penalties, including a $213 million criminal fine, according to a September 2016 statement from the Department of Justice. Chief Executive Officer Daniel Och personally paid $2.2 million to settle the SEC’s charges without admitting or denying them.

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