The Morning Brief: Hedge Funds’ Formula for Success

Wow! Here is another reminder than some investors are more equal than others. Liberty Media Corporation announced it has raised $1.55 billion from a cadre of investors — mostly hedge funds — to pay for its acquisition of Formula 1. Under the deal, the investors agreed to buy shares of Liberty’s Series C stock for $25 a pop. On Tuesday, the stock closed at $30.80. This investment instantly gives these investors a more than 23 percent gain. Nice work if you can get it.

The investors are hedge fund firms Coatue Management, D.E. Shaw & Co., JANA Partners, Soroban Capital Partners, SPO Advisory Corp., and Viking Global Investors and investment firm Ruane, Cunniff & Goldfarb. “We are excited that this impressive list of investors will participate in the acquisition of Formula 1,” says Greg Maffei, president and chief executive officer of Liberty Media, in a press release. The stock slipped $0.27 on Wednesday, to close at $30.53.
___

November was a strong month for activist managers, and this includes even the very small ones. For example, Voce Capital, which has about $120 million under management, surged 11 percent last month, its best month ever. This put the San Francisco firm, headed by Dan Plants, very close to the break-even point, down 0.83 percent for the year. November results were led by its two largest positions: Cutera, a cosmetic laser company, and Air Methods, a helicopter operator. ___

Barington Companies Equity Partners LP, another activist fund that is roughly the same size as Voce, surged about 6 percent in November. The fund, managed by Barington Capital Group and headed by James Mitarotonda, is now up 19.34 percent for the year.
___
One day after Pershing Square Capital Management’s Bill Ackman unloaded 3.5 million shares in Valeant Pharmaceuticals International, the stock sunk about 4.4 percent on Wednesday, to close at $14.13, just slightly above its all-time low. Pershing Square Holdings, Ackman’s public fund, is up 1.5 percent this month through December. It has now cut its loss for the year to 12.2 percent.

Related