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The Morning Brief: Steel Partners’ Lichtenstein Plans New Fund

Activist hedge fund manager Warren Lichtenstein plans to raise $500 million for a new fund, the S-III Opportunity Fund, according to Reuters. This is his first new vehicle since he launched Steel Partners II in 1993. Lichtenstein was an early activist but never ended up significantly growing his firm. Steel Partners Holdings usually focused on small, even microcap, stocks that few people had heard of. Lichtenstein also ran a fund designed to shake up businesses in Japan. “Our new fund will invest only in public companies,” he told clients in a January 17 client letter, Reuters reports. “Our approach will be to work in a cooperative manner with management teams and Boards to help build shareholder value.”

In a 2004 interview, Lichtenstein told me he prefers to compare himself with Berkshire Hathaway CEO Warren Buffett or to Steven Ross, who used his own deal-making prowess to rise spectacularly from running his father-in-law’s funeral home and parking garage business to heading Time Warner. “I call our approach private equity in drag,” Lichtenstein quipped at the time. “I’m much more aligned mentally with private equity firms.”’

Lichtenstein grew up in Great Neck, an affluent Long Island suburb 20 miles from Manhattan. He graduated from Great Neck North High School and attended Tulane University for two years before transferring to the University of Pennsylvania, where he received a BA in economics in 1987.

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Barclays has cut its rating on hedge fund favorite Apple to equal weight from overweight and trimmed its price target by $2, to $117 a share, stressing in a note to clients that it doesn’t see much growth at the iPhone and iPad maker. The bank is concerned about customers preferring the earlier-generation iPhone 6 over newer models and the “maturation of the device-centric consumer electronics adoption wave.” Another worry, Barclays told clients: China and India may not emerge as growth catalysts in the next 12 months. At the end of the third quarter, Apple was held by at least 158 hedge funds, according to Goldman Sachs Group, more than any other stock. Shares in the company fell slightly yeterday, closing at $119.97.

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Daniel Loeb’s Third Point Ventures led a newly completed $45 million Series D financing round for Aryaka, a provider of SD-WAN (software-defined wide area network) platforms to companies. In a press release, Aryaka said that it has generated more than 100 percent year-over-year growth for five straight quarters. “When we look at companies that we want to invest in, we consider market, technology, and team,” Robert Schwartz, managing partner of Third Point Ventures, stated in the announcement. “Aryaka is positioned perfectly at the tipping point of an enormous marketplace that is moving away from legacy MPLS technology and looking into next-generation solutions to help connect seamlessly worldwide to business-critical applications.”

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Shares of Valeant Pharmaceuticals International fell nearly 3 percent on Tuesday to close at $13.59, bringing their two-day loss to 8 percent. The stock is now down 6.5 percent year-to-date.

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