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The Morning Brief: Barclays Cuts Price Target on a Bill Ackman Favorite
Barclays cut its price target on Platform Specialty Products, a favorite of Pershing Square Capital Management’s Bill Ackman, from $11 to $10 after the chemical producer raised equity to increase its cash position. This means the company in effect de-levered, which the investment bank says is a good thing.
Barclays says the move will enable the company to retire some preferred stock and refinance its term loans. However, the equity raise diluted the stock. It may sound like only one dollar, but the change in the price target works out to a 9 percent reduction.
Platform was one of nine U.S. long holdings of New York-based Pershing Square. Its Pershing Square Holdings fund lost another 5.53 percent in September. As a result, it is down 18.8 percent for the year. However, it returned 2.9 percent for the quarter.
Shares of Och-Ziff Capital Management Group are down nearly 8 percent over the past two trading days, since the embattled New York hedge fund firm disclosed that its assets under management declined by $2.3 billion in September alone. The stock now stands at $3.76.
Paul Singer’s New York hedge fund firm Elliott Management, which often engages in activist activities, has increased the pressure on Korean electronics company Samsung Electronics Co. Elliott fired off a letter to Samsung’s board of directors, urging it to take various steps to boost the value of its stock. The letter was signed by Blake Capital and Potter Capital, both Elliott affiliates and current Samsung shareholders. The letter calls on the company to, among other things, restructure in a “demerger,” which would create a publicly traded holding company, Samsung Holdco, and an operating company, Samsung Opco. Elliott is also calling on the company to issue a special cash dividend, list Samsung Opco on the Nasdaq and improve its corporate governance.
“We see this as a defining moment and a tremendous opportunity for the forthcoming new leadership of Samsung Electronics to further advance the company’s remarkable legacy,” the letter states. “The Samsung Electronics Value Enhancement Proposals will deliver better capital returns, better corporate governance, and enhanced shareholder value, for all Samsung Electronics’ shareholders — whilst simplifying, and retaining the founding family’s controlling interest in, the current Samsung group corporate structure, for the benefit of all stakeholders.”
Elsewhere in its portfolio, Elliott cut its stake in Cabela’s to 4.2 percent. As a result, Elliott no longer needs to file timely disclosures with the Securities and Exchange Commission when it sells additional shares of the seller of outdoor gear. The retailer has agreed to be acquired by competitor Bass Pro Shops for $4.5 billion. One year ago Elliott had urged Cabela’s to put itself up for sale when the hedge fund initially disclosed an 11 percent stake in the company.