The Morning Brief: Eminence, Elliott and Sandell Wage Activist Battles

Ricky Sandler’s Eminence Capital continues to turn the heat up on Jos. A. Bank Clothiers. The New York–based hedge fund firm announced on Tuesday that it plans to nominate two director candidates to the company’s board at the clothing retailer’s 2014 annual meeting. In a letter to the board requesting the questionnaire that potential nominees must complete, Sandler said he will support The Men’s Wearhouse’s own slate of nominees for the Jos. A. Bank board and plans to withdraw his nominees if those proposed by MW are still in the running at the time of the annual meeting. However, stressing that Jos. A. Bank’s nomination window will be closing soon, he decided to submit his own slate “to ensure both that JOSB is pursuing the combination with MW as vigorously as possible, and that JOSB directors will be held accountable if they approve an alternative transaction or cause JOSB to take other action before the annual meeting that would frustrate a transaction with MW,” Sandler said.
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Meanwhile, Elliott Management stepped up pressure on one of its many activist targets. The New York–based hedge fund firm sent a letter to the board of directors of Riverbed Technology asserting that a majority of research analysts and other independent observers support its $19 per share offer for the company. Elliott, which owns 10.5 percent of the stock, also warned of the downside risk to the stock if the company rejected his offer, which is designed to smoke out other interested parties that might be willing to pay even more for the company. “Since the initial filing of our 13D in November, we have been inundated with phone calls from Riverbed shareholders, both new and longstanding,” Elliott portfolio manager Jesse Cohn states in the letter. “This feedback has only intensified over the last five days. At this point, we have had dozens of conversations and have heard from a majority of Riverbed’s shareholder base.”
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In yet more activist news, Sandell Asset Management Corp., which owns 6.5 percent of Bob Evans Farms, filed a complaint in Delaware Chancery Court in an attempt to prevent the board of the operator of Bob Evans Restaurants to change the threshold for successfully amending the bylaws. Specifically, Thomas Sandell, CEO of New York–based Sandell Asset Management, noted that the board adopted, without shareholder approval, a requirement that an 80 percent supermajority shareholder vote be required for shareholders to amend the bylaws less than three months after shareholders “had overwhelmingly voted” to reduce a supermajority requirement to a majority threshold. Sandell plans to pursue a consent solicitation to expand the size of the board. He also accused the board of engaging in cronyism and preserving “the irresponsible spending habits and poor decisions” made by chairman and CEO Steven Davis.
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Meanwhile, Keith Meister’s Corvex Management said in a regulatory filing late Monday that the hedge firm and Eric Mandelblatt’s Soroban Capital Partners have raised their combined stake in Williams Cos. to 6.74 percent of the shares — 9.86 percent of the shares if you include cash-settled swaps and options.
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QFS Asset Management is the latest quant hedge fund to return money or shut down. The Greenwich, Connecticut firm Tuesday announced it would return nearly $1 billion to clients. “After careful consideration, QFS has concluded that the current market environment does not offer adequate risk adjusted opportunities for fundamentally-driven quant macro strategies, and that is unlikely to change for the foreseeable future,” states Karlheinz Muhr, Chairman and CEO of QFS, in a press release. QFS said it will continue its research efforts in the global macro and currency markets and seek to develop new “and innovative sources of returns.” In 1988, Sanford Grossman founded QFS when it was known as Quantitative Financial Solutions. When QFS acquired Cenario Capital in 2011, Grossman resigned as chief executive and handed the CEO reins to Muhr, who had been Cenario’s chairman and chief executive. Grossman resigned as chairman at the end of 2012. In January 2013, GAM Group AG, a wholly owned subsidiary of the Swiss investment manager GAM Holding AG, took a 30 percent stake in the company.
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UBS raised its price target on two internet stocks popular among the hedge fund set, especially the Tiger Cubs. It lifted its target on Priceline.com to $1,300 from $1,220 and its target on TripAdvisor to $88 from $78.
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Stephen Mandel Jr.’s Greenwich, Connecticut–based Lone Pine Capital raised its stake in Wyndham Worldwide, a major player in the hotel and timeshare businesses, by roughly one million shares, to more than 6.77 million shares, or 5.2 percent of the total outstanding. The regulatory filing said the investment is passive.
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SAC Capital Advisors money manager Vishal Ghiya resigned to start his own hedge fund firm. He reportedly managed $500 million and was a generalist who invested across a wide variety of industries.