Score this one for William Ackman. The activist hedge fund manager won a key court ruling that said he may vote at Allergan’s December 18 special meeting of shareholders. Allergan, which makes Botox, is the target of an unsolicited joint takeover offer by Valeant Pharmaceuticals International and Ackman’s hedge fund firm Pershing Square Capital Management. Allergan had tried to prevent Pershing Square, Valeant and other shareholders that supported their efforts from voting at the upcoming meeting.
Valeant recently signaled that it would lift its offer for Allergan to $60 billion. The ruling paces the way for Pershing Square and Valeant to replace a majority of Allergan’s directors, who presumably would then vote to sell the company to Valeant. “Today’s ruling is a victory for all Allergan shareholders as it puts the choice of Allergan’s future in the hands of its owners,” stated J. Michael Pearson, Valeant’s chairman and chief executive officer, in a statement. “We look forward to the December 18 special meeting, where we hope to move a large step closer to the compelling combination of Valeant and Allergan that will create an unrivaled platform for growth and value creation.”
The court, however, also told Valeant and Pershing Square to “make corrective disclosures” to clarify their “co-bidder” relationship. Some critics have raised questions about their close ties and the timing of Pershing Square’s purchase of Allergan stock, suggesting possible illegal insider trading. “We are pleased that the court ruled there are serious questions as to the merits of Allergan’s insider trading case against Pershing Square and Valeant, and ordered them to revise their disclosures to reflect the truth behind their hostile acquisition plan,” Allergan says in a statement. “The Allergan board of directors is strongly committed to protecting the stockholder franchise and believes it is important that the rights of the company’s stockholders not be infringed by the actions of one hedge fund that significantly profited (to the detriment of other stockholders and the market) by trading in Allergan securities while in possession of material non-public information regarding Allergan.”
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Another hedge fund has apparently become a casualty of poor performance. Kingsguard Advisors, a global macro hedge fund firm, is closing after losing 8.3 percent in October, according to Bloomberg. The New York-based firm was launched in 2012 by former Goldman Sachs Group traders Rishi Chadda and Cyrus Pouraghabagher. The firm started out with $50 million from Bahrain-based investment firm Investcorp, which provides seed capital to hedge fund managers among other lines of business, according to the report.
Other macro funds have also been struggling, including New York-based Caxton Associates’ Caxton Global Investment, which was down 5.60 percent last month through October 28, bringing its loss for the year to 7.83 percent. Through October 17, South Norwalk, Connecticut-based Discovery Capital Management’s Discovery Global Macro fund shed 11.20 percent for the month, expanding its loss for the year to 20.59 percent, while the Discovery Global Opportunity Fund lost 10 percent for the month through October 17, bringing its loss for the year to 16.13 percent.
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Daniel Och’s OZ Master Fund, managed by his New York-based multistrategy firm Och-Ziff Capital Management, posted a small loss of 0.47 percent in October, trimming its gain for the year to 2.06 percent. His OZ Asia Master Fund gained 0.85 percent last month, cutting its loss for the year to 2.67 percent, while his OZ Europe Master Fund lost 1.67 percent in October and is now down 2.36 percent for the year. The firm also said that assets under management fell slightly by $200 million in the past month, to $46 billion. However, for the year, it enjoyed capital net inflows of $4.8 billion and performance-related appreciation of $977.7 million. Assets under management include assets in the company’s multi-strategy, credit, real estate and equity funds, collateralized loan obligations and other alternative investment vehicles it manages. Separately, Och-Ziff, one of the only publicly traded hedge fund firms, reported a decline in third-quarter earnings, but earnings came in way above Wall Street estimates.
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The Credit Suisse Liquid Alternative Beta Index rose 0.62 percent in October, boosting its gain for the year to 2.45 percent. The long/short equity strategy was the best performer, gaining 2 percent in October, and is now up 6.73 percent year-to-date. The managed futures strategy was the second-highest performing strategy during both periods, gaining 1.14 percent in October and 4.33 percent year-to-date.
