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The Morning Brief: Elliott Demands Diligence Materials From Riverbed

Elliott Management fired off a press release Tuesday reaffirming its interest in acquiring Riverbed Technology, the network-equipment company. “Elliott remains extremely interested in acquiring Riverbed, and our $21 cash offer still stands,” said Jesse Cohn, a portfolio manager at Elliott, in a statement. Cohn points out that Riverbed’s stock is trading well below the New York hedge fund firm’s $21 offer as well as its initial $19 offer “and vastly below the levels at which other potential buyers are interested.”

Riverbed rejected the $21 aoffer in late February. Since then published reports suggested that several private equity firms may be interested in the company. In the statement, Cohn lamented that Riverbed’s board has ignored “repeated requests for access to diligence materials,” adding, “Elliott continues to believe that the best path forward for Riverbed is for the board to start acting in the best interest of shareholders by providing all interested buyers with access to diligence with an eye toward achieving a value-maximizing outcome.”

Hayman Capital’s Kyle Bass continues to strongly support General Motors in the face of the scandal over the carmaker’s failure to report and corrrect ignition defects that may have led to over a dozen deaths. Appearing Tuesday morning on CNBC. the hedge fund manager said the carmaker is the No. 1 holding of his $2 billion firm. “The question is why isn’t anyone defending General Motors, and I think neither side of the aisle can gain political capital by defending them,” Bass said. “They’ve been indicted in the public court of opinion. If you’re talking about true legal liability, it is de minimis.” One reason for his optimism: Under the company’s 2009 bankruptcy and government bailout, any liability claims from before the bankruptcy were wiped out. Consumer-product liabilities were discharged with the bankruptcy, Bass said.

Big problems at Jim Melcher’s macro hedge fund firm Balestra Capital. Norman Cerk and Matthew Luckett, co-portfolio managers at the firm’s flagship fund, have resigned, according to CNBC, which obtained a client letter. Cerk, who serves as head trader, joined Balestra in 1997, while Luckett is responsible for portfolio strategy, research and risk. “Over the last few months, it became increasingly clear that we need a single voice and vision regarding the future of the firm and the portfolio management of Balestra Capital Partners,” the letter reportedly stated. Melcher will once again serve as sole portfolio manager for the firm. Balestra managed $1.64 billion at the beginning of the year and drew attention when its main fund rose 199.8 percent in 2007 and 45.8 percent in 2008. However, in recent years it has posted mediocre performance. It lost 7.8 percent in the first quarter after rising just 7.82 percent last year, according to CNBC. It lost 6.08 percent in 2012. But it has been a winner overall, producing net annualized returns of 19.99 percent since its 1999 inception, according to the report.

The Credit Suisse Hedge Fund Index fell 0.48 percent in March, pushing down its gains for the first quarter to 0.93 percent. The best performing strategy was even-driven, up 2.90 percent for the quarter, while the subset of distressed investing rose 3.07 percent. Managed futures fell 4.29 percent for the quarter while dedicated short bias lost 4.18 percent.

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