This content is from: Portfolio

The Morning Brief: Former SAC Trader Gets Three and a Half Years

Oh how the once mighty SAC Capital portfolio managers continue to fall. The latest: Michael Steinberg, who on Friday was sentenced to three and a half years in prison for his role in the insider trading scandal. He was also fined $2 million and ordered to forfeit $365,000. The 42 year-old, who at one time was responsible for technology, media and telecommunications stocks at SAC’s Sigma Capital Management unit, was found guilty in December for trading several technology stocks using insider information that produced profits of $1.8 million. “For most people on the planet, $1.8 million of gain is a lifetime of accumulated wealth,” U.S. District Judge Richard Sullivan said before sentencing Steinberg, according to Bloomberg. “Maybe in a hedge fund it’s no big deal but it’s a lot of money to most people.” Still, the government sought a sentence of more than six years. Altogether, eight managers and analysts have been convicted in the government’s investigation of SAC Capital. Next up to be sentenced: Mathew Martoma, a former fund manager for SAC’s CR Intrinsic Investors unit, who is scheduled to hear his fate next month

Darden Restaurants stuck out its middle finger at Starboard Value and the majority of shareholders who recently called on the company to hold a special meeting. The restaurant company Friday announced that it will sell its Red Lobster business to Golden Gate Capital for $2.1 billion. Darden figures to receive $1.6 billion in cash from the deal and plans to use about $1 billion to retire debt and the remainder to buy back stock. The deal did not sit well with Jeffrey Smith, Starboard’s CEO and chief investment officer, who in a statement called it “the wrong transaction, at the wrong time, for the wrong reasons” that “woefully undervalues” Red Lobster and its real estate assets. “It is truly unbelievable that the current board has the audacity to negotiate a transaction that does not require shareholder approval when a significant majority of Darden’s shareholders have formally demanded a special meeting on this very topic,” Smith stated. “If the company was intending to ignore the will of the shareholders and rush to do a transaction, you would have at least thought that it would have been a highly opportunistic transaction at a substantial premium to the underlying value of Red Lobster. However, that is clearly not the case and it appears that Darden has instead sold Red Lobster in a rushed transaction at a severe discount. We seriously question the decision to rush such a transaction rather than wait to hear the views and perspectives of shareholders on this critically important topic.” Critics of the deal assert that if Darden had announced a tax efficient transaction for the real estate, the company could have received about $1.5 billion for Red Lobster’s real estate without paying taxes. We earlier reported that shareholders holding 57 percent of the shares outstanding had consented to call a special meeting in order to voice their opposition to Darden’s earlier plan to extricate Red Lobster.

Christopher Hansen’s Valiant Capital Partners was among a group of investors that agreed to invest about $200 million in San Francisco-based social bookmarking site Pinterest in a Series F funding. This was at least the second time Valiant invested in the company, according to It previously made private investments in Facebook Inc., Dropbox Inc. and Evernote Corp.

It’s official: The National Basketball Association unanimously approved the sale of the Milwaukee Bucks to Avenue Capital Group co-founder Marc Lasry — who tied for No. 40 on Alpha’s Rich List, Second Team — and his longtime friend Wesley Edens, a principal and co-chairman of the private equity and hedge fund firm Fortress Investment Group. The deal, in which Lasry and Edens agreed to buy the team for $550 million, is expected to close very shortly. The new owners can expect the team to benefit greatly from a new arena the league says it must have and one of the top draft picks this year. As Alpha reported earlier, however, the NBA has agreed to buy the Bucks back from them for a reported $575 million if the arena is not under construction by fall 2017, in which case the league might turn around and sell the team to a new owner who moves it to another city.

A large number of hedge fund luminaries were among the 48 money managers who competed in a doubles tennis tournament on Saturday to benefit The R Baby Foundation. Founded by Marathon Asset Management’s COO and Partner Andrew Rabinowitz, the foundation helps to improve pediatric emergency medical care, particularly providing grants to area hospitals to help ensure that newborn babies suffering from viral infections and other infectious diseases receive top-notch care. Among the hedge fund participants: William A. Ackman of Pershing Square Capital Management, Marc Lasry of Avenue Capital Group and Bruce Richards of Marathon.

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