Surprise, surprise: Thursday was yet another busy day for the hedge fund activists.
First of all, Daniel Loeb’s Third Point said in a regulatory filing it will nominate three individuals to the board of Sotheby’s at its 2014 annual meeting. They include Loeb himself. The New York hedge fund owns 9.5 percent of the auctioneer.
“The entrenched board also lacks an expert in the type of fundamental corporate restructuring that Sotheby’s must undertake,” Third Point states in the filing. “The tasks ahead for this board remain formidable — including critical cost-cutting treated only superficially to date and further leveraging the company’s brand and market knowledge to capture a greater share of the global art profit pool by refocusing online initiatives, increasing private sales, and taking a larger slice of the contemporary art market. It is a matter of concern to all shareholders that no board member today possesses a demonstrated track record in this type of restructuring.”
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Meanwhile, Trian’s Nelson Peltz Thursday turned up the heat on PepsiCo. CNBC’s Scott Wapner reported that the New York-based activist, spurned by the company, has taken his case to break PepsiCo. into separate beverage and snack companies directly to individual shareholders and has received positive reaction. Wapner said Peltz promises to “relentlessly” take his case to every major shareholder of Pepsi in the coming weeks. Peltz also reportedly told the TV anchor he plans to buy more Pepsi stock.
— Peter Feld, a managing member and head of research of New York hedge fund firm Starboard Value, has resigned as a member of the board of directors of Integrated Device Technology, an activist target of Jeffrey Smith’s Starboard.
“Since June 2012, operating margins have improved from low single digits to over 20 percent last quarter, and the stock price is currently at a six-year high,” Feld said in a press release. “IDT is extremely well positioned for future success with a renewed product focus, best-in-class financial performance, a healthy balance sheet and a very talented employee base.” Feld still sits on the board of Tessera Technologies and has previously sat on several other boards.
— Paul Singer’s New York-based Elliott Management acquired a stake of nearly 11 percent in UK-based F&C Asset Management, according to Reuters. It established the position through the purchase of derivatives equivalent to about 63.8 million ordinary shares. In January, Bank of Montreal agreed to buy F&C for 708 million pounds. There is some media speculation that a higher bid may come from another party.
— Meanwhile, Barclays maintained its highest rating on the shares of Hess in large part due to Elliott’s investment in the stock. “Over the next 12 months, we continue to think the stock offers limited downside risk given our view that Elliott Associates will likely remain an active shareholder in the company over the long haul, implying an ongoing check on Hess’s operating performance,” it tells clients in a note.
— Lloyd Barriger, former president and principal shareholder of Monticello, New York-based hedge fund firm Gaffken & Barriger Fund, was sentenced to five and a half years in prison for committing securities fraud, conspiracy to commit securities fraud, mail fraud, and conspiracy to commit mail fraud in connection with a $12 million investment fraud. He also was ordered to forfeit more than $12 million and make restitution of more than $9 million to his victims. Barriger was accused of mischaracterizing the fund as a safe and liquid investment that paid a minimum return of 8 percent per year when he solicited $12 million from 70 investors. In fact it invested primarily in real estate collateralized commercial mortgage loans. As it turns out, the so-called preferred return he quotes to investors far exceeded the actual return.
— Shares of J.C. Penney surged more than 25 percent to $7.47 following an encouraging earnings report on Wednesday evening after the market closed.
— Shares of Tesla fell slightly, briefly halting their exponential run-up. Tesla is one of the hottest stocks that hedge funds have largely overlooked.
