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Morning Brief: Jana Tells PetSmart to Sell Itself

Activist hedge fund Jana Partners is calling on PetSmart to seek a buyer for itself. In a regulatory filing, the New York hedge fund firm headed by Barry Rosenstein warned that if the company does not put itself up for sale, it will launch a proxy fight at the next annual meeting. Jana, which owns 9.8 percent of PetSmart’s shares, said in the filing it opposed the pet supply retail chain’s planned leveraged recapitalization. “A sale very likely offers the highest possible risk-adjusted return for shareholders,” Rosenstein said in a letter sent to PetSmart’s board of directors. He said he agrees with long-time shareholder Longview Asset Management that the company would most likely receive the highest price from so-called private market participants versus the public market. The stock, however, closed down 0.33 percent on an overall down day for the stock market.

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Shares of Darden Restaurants surged 4.36 percent Tuesday after the company announced Monday morning that Clarence Otis had resigned as chairman and chief executive officer. It also said it will nominate a slate of nine directors for its 12 available seats and “ensured that at least three of the nominees proposed” by activist hedge fund Starboard Value would be elected at the annual meeting. However, in a press release, the company said it has not reached an agreement over settlement talks with Starboard related to a planned proxy contest. “The company remains interested in a mutually acceptable resolution,” it added. In response, Smith said in a statement: “The overdue retirement of Clarence Otis is obviously in the best interest of Darden and its shareholders. It is surprising to us that it took this long.” In response to the company’s announcement regarding board nominees, Smith said the changes are “not sufficient given the depth of the value destruction and the abominable corporate governance that this board has overseen.” He added that the board’s notion that the retirement of just two independent directors “would erase years of poor performance and oversight” demonstrates it “is out of touch with reality and unwilling to take responsibility for its mistakes or to make the difficult decisions that are necessary to benefit shareholders.”

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Casablanca Capital announced that all six of its board nominees have been elected to the Cliffs Natural Resources board of directors at its recent annual meeting, citing preliminary estimates by its proxy solicitor. The activist hedge fund founded in 2010 by Donald G. Drapkin and Douglas Taylor owns 5.2 percent of the iron-ore miner’s stock.

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Tiger Global has made another investment in Flipkart, the India-based online shopping site. The hedge fund and private equity firm founded by Charles (Chase) Coleman along with Naspers co-led a new $1 billion round of funding, one of the largest for an Internet company, let alone one in India. Tiger Global was one among a handful of firms that invested a total of $210 million in the company in May. In fact, by one website’s count, this is at least the seventh time Tiger Global has invested in Flipkart.

One-time hedge fund proprietor and former Fidelity money manager Jeff Vinik has knocked down his second multi-million dollar home—next door to the one he had already razed. Altogether, he paid nearly $8 million for the two homes in Sarasota, Florida. According to a published report, the owner of the Tampa Bay Lightning hockey team plans to shell out more than $3.5 million to build a much larger waterfront home on the combined land. Vinik, who still owns a 10,000-square-foot estate in Tampa, recently paid $7.1 million for a local shopping plaza described by a media report as “beleaguered.”

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Balyasny Asset Management disclosed it owns 3.95 million shares, or 5.07 percent of NuStar Energy, a master limited partnership that is an independent liquids terminal and pipeline operator.

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