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The Morning Brief: Glass Lewis Deals Dan Loeb a Setback

Daniel Loeb’s Third Point released a new letter to shareholders of Sotheby’s, urging them to vote for Third Point’s slate of three nominees at the company’s annual meeting on May 6. The three nominees are Loeb, Harry J. Wilson, and Olivier Reza. Loeb is recommending shareholders oppose the company’s nominees — Jessica Bibliowicz, Robert Taubman and Daniel Meyer. We earlier reported that proxy advisor Institutional Shareholder Services endorsed two of Third Point’s three director nominees — Loeb and Reza, a former investment banker who has control of a collection of precious stones and jewelery that his father, Alexandre Reza, designed. On Friday, however, Loeb’s cause suffered a setback when proxy adviser Glass Lewis supported all three of Sotheby’s board nominees. “We believe the Dissident has identified certain areas of concern, but ultimately has fallen short of making a compelling case that additional changes in the boardroom are warranted at this time beyond those already implemented by the Company,” Glass Lewis said, according to Reuters.

Shares of Herbalife initially surged about 3 percent to 4 percent in after-hours trading, but then plummeted in spite of the multi-level marketer of nutrition supplements reporting strong quarterly results. Investors might be concerned that on Friday Ackman will be previewing a documentary on Herbalife aimed at exposing the stories of people who say the company victimized them. Herbalife reported sales and earnings that beat Wall Street expectations and provided full-year guidance that exceeds forecasts. It also suspended its dividend, a move which Carl Icahn immediately applauded on Twitter. The stock closed at $58.79 in the regular session, up 1.66 percent.

Goldman Sachs has come out with a list of momentum stocks with the most potential to rebound. David Kostin, Goldman’s chief U.S. stocks strategist, points out in a report that for this high-flying group of stocks to come back from their big decline since mid-March, they will need to overcome two hurdles — an expected rise in 10-year bond yields which Goldman’s strategists say have not supported such rebounds in the past, and the historical fact that higher-quality stocks have led momentum recoveries in the past but stocks with lower-quality metrics have fueled momentum during the past year. The momentum leaders through February that Goldman says have the most potential to spring back: Actavis, Netflix, Gilead Sciences, Thermo Fisher Scientific, Akamai Technologies, Johnson Controls, CBS, Pentair, Flowserve and Google.

Citadel disclosed a 6.3 percent passive stake in Athlon Energy, an independent exploration and production company.

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