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The Morning Brief: Hertz Settles Icahn Truce But Now Confronts Jana

Barry Rosenstein’s Jana Partners has moved on to its next high-profile activist target. The New York hedge fund firm has boosted its stake in Hertz Global Holdings to 32 million shares, or 7 percent of the total outstanding. In a regulatory filing, Jana said it believes the shares are undervalued, adding it has had discussions with the car rental giant’s board of directors and management regarding succession planning and board composition. It also said it may seek discussions about capital allocation, strategy and future plans. Jana also threatened to take further activist-like steps, such as acquiring a control stake in the shares, or “grouping” with other parties, “engaging in an extraordinary transaction, such as a merger,” with the company or acquiring “a material amount” of Hertz’s assets, or “seeking to exert negative control over the important corporate actions.” The move comes one month after Hertz agreed to an activist truce with Carl Icahn, giving the one-time corporate raider three seats on the board.

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Total capital in the hedge fund industry rose to a record $2.82 trillion at the end of the third quarter, up $18 billion or 0.6 percent from the prior quarter, according to HFR. This was the ninth straight quarterly record level. Most of the increase came from new capital allocations as investors added $15.9 billion to hedge funds in the third quarter. Even so, this was a little more than half the $30.5 billion in inflows in the prior quarter. However, inflows for the first three quarters amounted to $72.7 billion, the highest for the first three quarters of a calendar year since 2007, according to HFR. Third-quarter inflows were concentrated in event-driven and fixed-income relative-value arbitrage strategies, according to HFR. Interestingly, investors are starting to move away from the largest hedge funds. According to the report, inflows to small and mid-sized firms exceeded money allocated to the largest firms for the first time since 2009. About $5.1 billion went to firms managing less than $1 billion, $6.6 billion to firms managing between $1 billion and $5 billion and $4.2 billion to firms managing greater than $5 billion.

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Shares of hedge fund favorite Apple rose around 1 percent in after-hours trading after the consumer technology giant beat forecasts for both revenues and earnings. Demand is “off the charts” for the new iPhones, CEO Tim Cook said, according to CNBC. He also said he expects this year’s holiday season will be the best one ever for the company. The stock closed up 2.14 percent in the regular trading session.

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Fir Tree Partners, founded by Jeffrey Tannenbaum, cut its stake in Noble Corp. from 9.6 percent to 7 percent. Fir Tree sold about 9.2 million shares and reduced the number of call options to purchase 8 million shares, from 9.434 million shares. Shares of the oil driller are down about one-third since June, amid a worldwide decline in energy prices. However, the stock did jump by about 1.67 percent on Monday. In early August, Noble completed the spin-off of Paragon Offshore, which owns most of Noble’s standard-specification drilling business.

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