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The Morning Brief: Jana Target Safeway's Shares Slump

Shares of Safeway slumped 2.20 percent, to $38.60, on Friday, one day after Albertson’s, the supermarket chain controlled by Cerberus, agreed to acquire Safeway in a deal it valued at nearly $40 per share, or $9 billion.This includes $32 in cash and “other contingent consideration.”

You may recall that back in September Barry Rosenstein’s New York-based hedge fund firm Jana Partners disclosed it owned a 6.2 percent stake in Safeway hours after the company announced that it had adopted a one-year stockholder rights plan, saying at the time it had become aware of an accumulation of a significant amount of stock and the preemptive move was designed to “help promote the fair and equal treatment of all stockholders” and enable the board “to discharge its fiduciary duties.” However, Friday’s stock action suggests investors are unhappy with the deal Safeway made. And the poison pill makes it hard for an unwanted suitor to step up and pressure the company outside of making a larger unsolicited offer. No word what Jana’s next move might be.

Casablanca Capital said in a regulatory filing it will nominate six candidates for election to the board of Cliffs Natural Resources. In a letter sent to the mining company, the New York hedge fund firm, founded in 2010 by Donald Drapkin and Douglas Taylor, also called on the company to refocus on the core U.S. business, divest its Asia Pacific assets, reduce its “bloated cost structure,” create a master limited partnership and change management and the board. "The board that owns virtually no shares and has presided over an 80 percent value destruction is in our view showing its true colors by indefinitely postponing a shareholder vote and falsely suggesting that the delay was advocated by Casablanca,” the hedge fund states in a press release.

New York-based Sandell Asset Management raised its stake in Bob Evans Farms to 8.1 percent. In a regulatory filing it said it purchased call options covering 386,500 shares of stock with an exercise date of September 30, 2014 and a strike price of $55.00. Bob Evans runs more than 600 restaurants. Sandell, founded by Thomas Sandell, earlier this year filed a complaint in Delaware Chancery Court in an attempt to prevent the board from amending the bylaws, which Sandell felt would then severely restrict the rights of shareholders. The company subsequently agreed to reverse that change.

The HFRI Fund Weighted Composite Index rose 2.1 percent in February, the best monthly gain in more than a year. HFR added that there were significant and broad-based contributions across a diverse range of strategies. The HFRI Fund of Funds Index rose 1.8 percent for the month, which is also the best monthly performance since January 2013.

Bridgewater Associates’ controversial planned move downstate from Westport, Connecticut to Stamford, Connecticut looks doubtful now. According to the Westport News, a lawyer for the world’s largest hedge fund firm, founded by Ray Dalio, said he believes the odds are against a move. The planned move is a hot-button issue in the hedge fund-heavy corridor. According to reports, the state offered Bridgewater as much as $115 million. In return, the firm promised to boost its employment ranks by 750 to 1,000 employees, to its current staff of 1,225.

Worth Venture Partners has launched The Emerging Manager Onshore Fund, a $45 million fund of funds. The firm was founded in 2012 by Abby Flamholz and David Wertentheil. It has received additional commitments that would bring total capital to $60 million.

Steven Cohen’s family office, SAC Capital Advisors, disclosed it owns a 5 percent passive stake in Walter Investment Management, which provides business services to the residential mortgage industry.

New York-based Soros Fund Management disclosed a 6.97 percent passive stake in Digital River, an e-commerce outsourcing company. At the end of 2013, Soros did not own any shares of the company’s stock, but did have a roughly $275 million investment in notes issued by the company.

Tiger Global Management boosted its stake in dELiA*s, Inc., the teen girl’s retailer, by about one million shares, to 6.3 percent of the total outstanding. The disclosure was made in a 13G filing suggesting it is a passive investment.

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