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Morning Brief: Corvex Responds to Energen’s Legal Strategy

The battle between the activist manager and the oil and gas exploration company is heating up.

Corvex Management’s Keith Meister fired off a scathing letter to the board of directors of Energen Corporation after the company rejected his request that the oil and gas exploration and production add several directors to its board. Last month, the activist hedge fund manager, who boosted his stake to 10.1 percent, said if he was unable to reach an agreement, he would call a special meeting of shareholders so they can approve an expansion of the size of the board to 15 and Corvex would propose its own nominees to fill the vacancies. Corvex said under Alabama law it can propose a special meeting if it owns at least 10 percent of the shares. In June Meister called on the company to put itself up for sale. Last week, Energen said in a regulatory filing that under Alabama corporate law, Corvex is not permitted to call a special meeting of shareholders for these purposes.

So on September 12 Energen sued in an Alabama Circuit Court. “It is important for this issue to be resolved in order for Energen to determine how to proceed without taking or permitting actions inconsistent with law and Energen’s governing documents,” it stated in the filing. It stressed that all but one of its nine directors are independent. It also said it expects to have further discussions with Corvex.

“Your actions speak volumes; instead of welcoming shareholder engagement, you are attempting to hide behind the Court,” Meister states in his letter in response to Energen’s filing. “We believe the primary goal of this litigation is to unduly preclude — or at least delay — your shareholders’ ultimate right to vote in a manner that is consistent with their interests as owners of your company.” Meister also reminded the board that in June Corvex called on the company to hire a bank “to seriously explore strategic alternatives” and meet with top shareholders to get their views on the value of various alternatives that could be available to the company.

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Daniel Gwak of Point72 Ventures led the $25 million Series A funding of Fauna, which markets the FaunaDB adaptive operational database. The company was created by software engineers from Twitter. Point72 Ventures is a venture capital operation funded by Steven Cohen and eligible employees of his family office, Point72 Asset Management.

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Citadel continues to build out its new Fundamental Strategies investment unit. The group, which focuses on opportunistic investment ideas across the capital structure, earlier this year brought in Eric Felder from Magnetar to head up the unit. According to BusinessInsider, it has hired three individuals for the team, which is expected to top out at 20 to 25 investment professionals. The three are Michael Doniger, who serves as director of research; Neel Gupta, who is an equities portfolio manager; and Jeff Psaki, who is expected to join Citadel later this year heading up the strategy’s credit area.

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Another hedge fund has become a victim of the multi-year macro malaise. High Hendry is shutting down his 15-year-old firm, Eclectica Asset Management, according to Bloomberg. The Glasgow, Scotland native’s Eclectica fund was down 9.4 percent for the year through August after losing 4 percent last year, according to the report. The fund managed a mere $30.6 million, while Eclectica’s macro strategy managed just $116 million.

“It’s a function of economics,” Hendry told Bloomberg in an interview on Friday. “The costs of running a hedge fund today, both regulatory and with other commercial considerations, were just too great. But I died in active combat.” Addressing the difficulty navigating various markets that macro investors operate in, the manager added, “The last three months were harrowing. To my great, great, great horror, I became deeply correlated to the travails of President Trump’s presidency and of course these geopolitical events, which were sparked off in the Korean peninsula.”

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