This content is from: Portfolio

The Morning Brief: Citadel Continues its Winning Streak

Kenneth Griffin’s Citadel extended its winning ways in July. The Chicago firm’s multistrategy funds—Kensington and Wellington—rose 2.5 percent last month and are up 12.05 percent for the year. Citadel Tactical Trading was up 2.55 percent in July and 13.25 percent for the year, Citadel Global Equities Fund rose 2.95 percent and 13.65 percent while Citadel Global Fixed Income climbed 2.75 percent in July and is now up 2 percent for the year. Performance of the multistrat funds was primarily driven by equities and fixed income. It also received positive contributions from commodities, quantitative strategies and credit.

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Daniel Loeb’s Third Point has identified a new activist target. The New York hedge fund said Wednesday in a regulatory filing it owned 7 percent of Baxter International—nearly 10 percent, including stock equivalents—and is seeking two board seats. In the filing, Third Point said it started building its position in mid-June. It pointed out that on July 2 it sought approval to buy additional shares of the health-care company under the Hart-Scott-Rodino Antitrust Improvements Act. On July 30, Third Point representatives met with the management, including the CEO and, on August 4, with Thomas Stallkamp, Baxter’s lead director. Third Point also said that it may engage in further talks related to the company’s operating strategies, performance, management succession plans and corporate governance matters and “may also take other steps to increase shareholder value as well as pursue other plans or proposals.” In a letter to CEO Robert Parkinson and Stallkamp, Loeb applauded the company’s recent spin off of Baxalta, and CEO succession plan. Loeb also noted that his group is seeking two board seats. “We have an excellent track record of participating on corporate boards and on CEO search committees, in particular, as demonstrated by our role in hiring several stellar, high-performing CEOs,” he said. “We are well-positioned to help select a new CEO, drive strategy, and provide a thoughtful perspective on capital allocation. We will also bring our significant experience in implementing best practices of corporate governance to this board.” Loeb criticized Baxter’s staggered board as “shareholder unfriendly and archaic.” This one has only just gotten started.

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Alexander Roepers’ Atlantic Investment Management cut its stake in Wesco International to 4.9 percent. In April, the New York activist said it owned 5 percent of the electronics distribution and services company. In its filing at that time, the hedge fund firm known for its AJR and Cambrian Fund said it held the shares for “investment purposes.” It did not offer any plans or recommendations, relying on mostly boiler-plate language to say it will monitor the performance of the company.

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Larry Robbins’ Glenview Capital Management cut its stake in VCA to about 8 million shares, or 9.83 percent of the total outstanding, down from more than 12 million shares at the end of the first quarter. We will know within a week or two how many shares it owned of the animal hospital owner as of June 2015.

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Tiger Global Management has participated in the $30 million Series B financing of India-based ZO Rooms. We reported that just last month the New York-based investor participated in the company’s $15 million Series A funding round, which enables people to book a budget-priced hotel room with a cell phone app.

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Shares of MedAssets plummeted another 4 percent or so on an otherwise very strong day for stocks, further embarrassing Jeffrey Smith, whose Starboard Value announced a major activist position the night before the company disclosed the loss of a major customer. The stock is now down around 14 percent or so since Starboard’s filing Monday evening.

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Shares of hedge fund favorite Hertz Global Holdings fell more than 3 percent on Wednesday and are down nearly 20 percent since late May alone. At the end of the first quarter, Barry Rosenstein’s Jana Partners was the largest shareholder, and the stock was the New York activist firm’s fourth-largest holding. Other hedge fund holders among the stock’s top-10 holders in the first quarter included Tiger Global Management, New York-based York Capital Management and New York-based Fir Tree Partners. However, there is no indication whether these firms retained these positions by the end of the second quarter.

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