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The Morning Brief: Nelson Peltz to Step off Ingersoll-Rand Board

Nelson Peltz, CEO of activist hedge fund Trian Fund Management told Ingersoll-Rand he does not want to stand for re-election as a director at the company’s upcoming annual meeting. In a regulatory filing, Peltz cited “other board commitments,” including his recent appointment to the board of Mondelez International. Peltz has been on the board of Ingersoll-Rand since 2012. In a letter to the industrial conglomerate’s chairman and CEO, Michael Lamach, Peltz said he was pleased with the company’s progress in boosting profitability. Trian now holds 6.44% of the company’s common stock.




Starboard Value continues to turn up the heat on Darden Restaurants. The New York activist hedge fund led by Jeffrey Smith has already called for a special meeting of Darden shareholders in an attempt to head off the company’s planned spinoff of its Red Lobster unit. In its latest salvo, Starboard published a detailed analysis of Darden’s real estate holdings, put together by Starboard and Green Street Advisors, a research firm specializing in real estate and REITs. The upshot: Darden’s real estate portfolio of over 1,000 stores and the buildings on another 850 is worth about $4 billion “and possibly far more.” Starboard asserts that separating the real estate could create an additional $1 billion to $2 billion of shareholder value. “A real estate separation can be structured with minimal debt breakage costs,” the report adds. “In a real estate separation, Darden shareholders can maintain their current dividend on a combined basis, while the combined companies will have lower payout ratios.”




Kenneth Griffin’s Citadel Investment Group disclosed on Tuesday morning that it owns 5.1 percent of William Lyon Homes, which is involved in the construction and sale of single family homes in California, Arizona and Nevada. Interestingly, on Monday Credit Suisse reinstated coverage of the stock with a neutral rating and a target price of $30. The rating is based on valuation metrics, but Credit Suisse also issued a report with a glowing appraisal of the company’s potential, saying: “Our neutral rating is based on our expectation for significant volume growth and strong margin profile over the next three years, driven by William Lyon’s long, attractively located land position, as it controls 10 years of land on a forward basis across California, Arizona, Nevada, and Colorado, much of which is marked to an attractive cost basis, resulting in strong gross margins.”




Crestline Investors, which manages about $7.6 billion in alternative investments, closed two new funds, with $980 million of investor commitments to Crestline Opportunity Fund II and $738 million of investor commitments to Crestline Recovery Fund III. Altogether the firm has raised $2.7 billion in six opportunistic funds. Opportunity Fund II will invest in certain credit strategies and other alternative strategies such as real assets, royalty streams, cash flow strategies and structured finance and hedge fund interests in the secondary market, including both fund interests and liquidating assets. These are generally purchased at a discount to net asset value. The Crestline Recovery Fund III is the third in a series of funds that invest in hedge funds in the secondary market.




There were no pranks on April Fool’s Day for the popular, high profile momentum stocks favored by many hedge funds. The Priceline Group, which abruptly changed its name from Priceline.com, surged nearly 5 percent. Google jumped 1.83 percent, Tesla Motors zoomed up by more than 4 percent, TripAdvisor swelled by 5.48 percent while Netflix rose 3.60 percent. Even Keurig Green Mountain, a favorite long among several hedge funds but a big short of Greenlight Capital, rose about 4 percent.

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