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Morning Brief: CSX CEO Hunter Harrison Has Died
Activist investor Paul Hilal founded Mantle Ridge to invest in CSX and pressed the railroad to hire Harrison as CEO.
CSX Corp., the railroad company in which Paul Hilal’s Mantle Ridge has an activist stake, announced Saturday, December 16 that its chief executive officer and president Hunter Harrison died “due to unexpectedly severe complications from a recent illness.”
His death in Wellington, Florida follows the company’s December 14 announcement that Harrison, 73, was on medical leave because of the complications, and that Chief Operating Officer James Foote would act as CEO. CXS shares dropped 7.6 percent to $52.93 on Friday, December 15.
“With the passing of Hunter Harrison, CSX has suffered a major loss,” Chairman Edward Kelly said in Saturday’s statement.
Hilal, a former partner at Bill Ackman’s Pershing Square Capital Management, created Mantle Ridge last year to invest solely in CSX. He aimed to repeat his success at Canadian Pacific Railway, where Pershing Square won a proxy battle and installed Harrison, eventually reaping a more than 300 percent gain on its stake.
“Professionally, Hunter was unmatched in this industry,” Canadian Pacific President and CEO Keith Creel said in a December 16 statement. “He will go down as the best railroader ever, plain and simple.”
Hilal had pressed CSX to hire Harrison, which the Jacksonville, Florida-based company agreed to do in March. Several Mantle Ridge nominees, including Hilal, were added to the railway’s board.
“Hunter was a larger-than-life figure who brought his remarkable passion, experience and energy in railroading to CSX,” the transportation company said.
More than four years after Paul Singer’s Elliott Management gained board seats at Hess Corp., the activist firm is ratcheting up demands on the oil and gas company.
Elliott wants to push out Chief Executive Officer John Hess, or possibly sell all or part of the company, according to The Wall Street Journal on December 14. “As long-term shareholders in Hess, we are frustrated by the company’s continuing underperformance,” John Pike, senior portfolio manager at Elliott said in a statement to the newspaper. “Shareholders are getting impatient, because the changes needed to remedy Hess’s severe undervaluation are substantial and need to be announced without delay.” A person familiar with the matter confirmed The Wall Street Journal’s report.
News that Elliott wants to remove the CEO sent Hess shares up 1.7 percent on December 15 to close at $43.40, though they’re still down about 30 percent for the year. The hedge fund’s struggle to turn Hess into a winner is a mar on its otherwise stellar reputation as an activist. Hess was trading around $68 a share when Elliott announced a 4.85 percent stake in the company in January 2013.
The firm has since increased its ownership to 6.7 percent of Hess, its third-largest position, worth just under $1 billion on September 30, according to a quarterly filing with the Securities and Exchange Commission.
John Griffin’s Blue Ridge Capital, one of the original “Tiger cub” hedge funds, is closing its doors after more than two decades, according to Bloomberg. Griffin told investors in a December 15 letter that he’s shutting the $6 billion firm, Bloomberg reported. Griffin began his hedge fund career working for Julian Robertson’s Tiger Management before leaving to start Blue Ridge in 1996.
The once-$40 billion London hedge fund firm Brevan Howard Asset Management was down to $10 billion at the end of October, and investors will withdraw at least another $1 billion at the end of this month, according to a December 15 Bloomberg report. Brevan Howard, a macro fund, is facing “a record annual loss” in 2017, Bloomberg said, citing an unnamed person with knowledge of the matter. The firm doesn’t plan to return capital to clients or covert the hedge fund into a family office, Anthony Payne, a spokesman for Brevan Howard told Bloomberg.
Bill Ackman and his Pershing Square Capital Management’s beleaguered Herbalife short bet just got some help from a group of Italian lawmakers, according to a Bloomberg report December 15. Six Italian senators have asked their government to investigate Herbalife, likening its marketing operations to a pyramid scheme, according to the news report. Bloomberg said the senators cited a report that 84 percent of its Italian salespeople haven’t made any money. Herbalife shares fell 4.3 percent on December 15 to close $67.03. Pershing Square declined to comment. Herbalife did not immediately respond to a request for comment.