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The Morning Brief: Tourbillon Makes an Activist Play
Shares of SunOpta surged 26.7 percent Friday after Tourbillon Capital Partners called on the organic foods company to put itself up for sale. In what appears to be the first publicly visible activist move by the New York hedge fund firm, founder Jason Karp asserts in a letter to the company that it “has the potential to yield a substantial premium” to its current price if it is acquired versus remaining as a standalone company. Tourbillion owns 9.9 percent of the shares and has an economic exposure comparable to a 14.8 percent interest based on derivative agreements, according to a regulatory filing on Friday.
The Tourbillon Global Master Fund got off to a rough start this year, posting a 6.6 percent loss in March and a 16.1 percent loss in the first quarter. In the letter to SunOpta, Karp says he is increasingly concerned the company may pursue “an uncertain business plan without a thorough evaluation of all value-maximizing alternatives.” He adds that SunOpta’s operations “remain vastly under-optimized,” which is affecting the company’s business performance and stock price.
Connecticut’s State Bond Commission agreed to provide $22 million in grants and loans to Bridgewater Associates, the world’s largest hedge fund firm, according to the Hartford Courant. Gov. Dannel Malloy made it clear the deal was designed to head off a planned move by the firm from Westport Connecticut to nearby Westchester County in New York. Under the deal, the firm, founded by Raymond Dalio, will receive a $17 million loan at 1 percent. This would be forgiven — and turned into a grant — if Bridgewater creates 750 new jobs and retains the 1,402 jobs it currently has in Connecticut. Bridgewater plans to use the money to renovate and expand its headquarters as well as its offices in the Connecticut cities of Wilton and Norwalk. “The job number is very significant,” Malloy reportedly said during Friday’s meeting of the commission.
Bridgewater manages a total of $150 billion. Last year, Dalio personally earned $1.4 billion, tying for third on Alpha’s annual Rich List ranking of top-earning hedge fund managers. Greg Jensen and Robert Prince, partners and co–chief investment officers of Bridgewater, each made $250 million. In the 13 years that Dalio has qualified for the ranking, he earned a total of $14.76 billion.
Shares of Valeant Pharmaceuticals International surged about 5.5 percent on Friday, to close at $28.41, on reports it recently rejected a takeover offer from Japan-based Takeda Pharmaceutical and TPG Capital Management. A deal now would actually be a big blow to investors such as William Ackman’s Pershing Square Capital Management, who amassed his stake at multiples of the current price.
Ackman initially bought stock at $196 per share. He bought an additional 2.1 million shares at about $112.75 per share and sold about 5 million shares in late December at a weighted-average price of $103.50. Then, in early February, he bought those shares back at $94.77. Ackman could be conflicted over a possible deal, however. Even if another company pays a premium to the current price, it is very possible a deal would be made at a price sharply lower than what Ackman had paid, on average. However, he is now a board member so he must consider all fair offers for the Canadian drugmaker.
Shares of SunEdison yieldcos and hedge fund favorites TerraForm Power and TerraForm Global surged when the stock market opened Friday, but then closed up slightly on news that Ahmad Chatila resigned from their boards and was replaced by David Ringhofer, the head of legal and corporate at SunEdison. He has been with SunEdison since 2009. Chatila is currently chief executive officer of SunEdison, the bankrupt renewable energy company. In addition, TerraForm Power said Nasdaq gave it 180 calendar days, or until September 12, 2016, to be in compliance with its listing standards. The company earlier breached its compliance when it failed to file its 2015 annual report and first quarter 2016 report on time.
Miami Beach, Florida-based Appaloosa Management is the largest shareholder of TerraForm Power, followed closely by Boston-based Adage Capital Partners. Last week New York-based Blue Mountain Capital Management raised its stake in TerraForm Power to around 6.47 million shares, or 7.1 percent of the total outstanding, which would make it the third largest shareholder. Other major investors include New York-based D.E. Shaw & Co. and Greenlight Capital.
New York-based York Capital Management is the largest shareholder of TerraForm Global. Other top-ten shareholders include Appaloosa, Greenlight and Adage.