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Morning Brief: D.E. Shaw Takes Activist Stake in EQT

The firm says its plan, which allows EQT to acquire Rice Energy, will unlock $8 billion of value.

The D. E. Shaw & Co. has taken a rare activist position. The multi-strategy firm and quant pioneer announced Thursday it owns about 4 percent of EQT Corp. and has a plan to unlock $8 billion of value by June 30, 2018. This suggests a 50 percent increase from the stock’s current price. In early July, Barry Rosenstein’s JANA Partners disclosed it owned 5.8 percent of the natural gas exploration and production company, vowing to prevent its planned merger with Rice Energy and threatening to launch a proxy fight.

In a letter to EQT’s board of directors, D.E. Shaw says its plan allows EQT to acquire Rice “and to deliver substantial value to shareholders.” Specifically, it calls on the company to separate its production and midstream businesses, restructure the midstream businesses through a merger with Rice, and appoint experienced midstream executives to the board. At the beginning of the year, D.E. Shaw was the world’s sixth largest hedge fund firm, with $34.7 billion. Through July, its Composite fund was up 6.25 percent.

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Alibaba Group Holding, one of the hottest hedge fund stocks, said that founder and executive chairman Jack Ma plans to sell as many as 16 million shares over the next 12 months, beginning in October. In a regulatory filing, the Chinese e-commerce giant said the sales will take place as part of a pre-arranged share sales plan under the Securities and Exchange Commission’s Rule 10b5-1. The 16 million shares account for 9 percent of Ma’s total holdings in the stock. Joseph Tsai, executive vice chairman, plans to sell as many as 5.5 million shares of the company over a 12-month period beginning October under the same arrangement. Rule 10b5-1 allows corporate officers and directors to sell shares over an extended period of time to reduce potential market impact and avoid concerns the individuals held confidential insider information. Shares of Alibaba fell about 1 percent on the news, suggesting investors are not spooked by the planned sales.

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Soros Fund Management disclosed in a regulatory filing the firm owns roughly 1.66 million shares of Exa Corp., or 11.07 percent of the producer of computer-aided engineering software. The family office of George Soros owned about 1.44 million shares at the end of the second quarter. The filing indicates the investment is passive.

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