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The Morning Brief: Icahn Boosts Freeport-McMoRan Stake

It’s the activist target hedge funds didn’t see coming. Entities controlled by Carl Icahn bought another 12 million shares of Freeport-McMoRan, boosting his stake to 8.8 percent of the mining giant. Most of the shares, including all of the newly reported shares, are to be acquired via forward contracts, according to a regulatory filing.

In his initial 13D filing on August 27, Icahn said he wants to have discussions with management and the board about its capital expenditures, executive compensation practices and capital structure as well as “curtailment” of “high-cost production operations.” Icahn also said he may seek board representation and to discuss the size and composition of the board.

Meanwhile, on Friday Freeport said it has sold about $1 billion worth of stock since August 10. It also said it may sell another $1 billion of stock. Little surprise, the shares fell nearly 10 percent on Friday alone and are down more than 53 percent since May.

Little wonder that Freeport McMoRan’s stock was not on the radar of other activists, let alone hedge fund managers, before Icahn took his stake. It’s hard to find another hedgie among the company’s top-50 holders at the end of the second quarter. However, it is the sixth-largest holding of Stanley Druckenmiller’s Duquesne family office, a stake established by the one-time hedge fund luminary in the second quarter. Perhaps this will change now with the stock way down, the company dumping hordes of shares into the market and Icahn starting to stir up trouble for management and the board.

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The University of Michigan named at least one hedge fund manager among seven managers with which it pledged to invest about $345 million. It plans to make a new $100 million investment in Chicago-based Alyeska Investment Group, launched by Citadel alum Anand Parekh. Altogether the fund firm has $9 billion in assets under management, which includes leverage.

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James McCormick has joined Prologue Capital as global head of strategy and research, according to the company. He will be based in the London office and oversee research. McCormick was most recently head of asset allocation research for Barclays in London, serving as managing editor of the Equity Gilt Study and the Global Macro Daily. Before joining Barclays, he was chief strategist at Comac Capital and held senior management roles in research and strategy at Nomura, Citigroup and Lehman Brothers. Prologue manages $1.2 billion, specializing in discretionary macro and fixed income relative value. This year, Prologue’s flagship macro fund is up 2.65 percent through August, according to a person familiar with the results.

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