Microsoft blinked. The software giant announced it agreed to cooperate with Jeff Ubben’s ValueAct Capital, the San Francisco-based activist hedge fund firm that owns about 0.8 percent of the stock. Under the deal, the company and certain directors will meet regularly with ValueAct president Mason Morfit. In addition, ValueAct has the option of having Morfit join Microsoft’s board at the first quarterly board meeting after the 2013 annual shareholders meeting. The hedge fund agreed not to own more than a certain amount of Microsoft stock.
“Our board and management team are committed to enhancing growth and value for Microsoft shareholders, and we look forward to ValueAct Capital’s input,” Steve Ballmer, Microsoft chief executive officer, said in a statement. Morfit is also a director of Valeant Pharmaceuticals International and a former director of Advanced Medical Optics, C.R. Bard, Immucor Inc., MSD Performance Inc. and Solexa Inc. We reported earlier that ValueAct was turning up the heat on Microsoft after buying about $1.9 billion of the company’s stock in the first quarter and added to its stake in the second quarter at the same time that David Einhorn’s Greenlight Capital was bailing out altogether.
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Richard Perry’s Perry Corp. is seemingly picking up where William Ackman left off. The hedge fund firm boosted its stake in ailing retailer J.C. Penney to 19 million shares, or 8.62 percent of the total outstanding, after acquiring 3 million shares “from a shareholder of the issuer as part of a registered, underwritten secondary offering at $12.90 per share,” according to a regulatory filing. The filing does not say whether Perry bought the shares from Ackman’s Pershing Square Capital Management. Perry says the position is “for investment purposes.” But keep in mind that Perry’s purchase was disclosed in a 13D filing, meaning he could easily turn hostile without violating securities laws.
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Hedge fund see, hedge fund do? Richard McGuire III’s Marcato Capital Management disclosed its has boosted its stake in Sotheby’s to 6.68 percent, less than a week after Daniel Loeb’s Third Point accumulated 5.7 percent of the shares of the auctioneer. Is McGuire simply following Loeb into the trade? Not at all. Actually, in late July Marcato reported it owned 4.45 million shares, or 6.61 percent of the total outstanding. At the time, the hedge fund warned in a regulatory filing it may enter into discussions with directors and officers of the company, other shareholders or third parties to discuss the company’s business, strategies and other matters.
“These discussions may review options for enhancing shareholder value through various strategic alternatives or operational or management initiatives including, but not limited to, improving capital structure and/or capital allocation, M&A, and general corporate strategies,” Marcato stated at the time. And who is this McGuire guy? Well, he launched Marcato in 2010 after working for another well known activist, William Ackman’s Pershing Square Capital Management.
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The Securities and Exchange Commission awarded three whistleblowers more than $25,000 combined for tips and information they provided to help the regulator and the Justice Department stop what the SEC calls “a sham hedge fund.” Altogether, the whistleblowers are expected to receive a total of $125,000. This works out to about 5 percent of the money that the SEC ultimately figures to collect from its enforcement action against Locust Offshore Management and its chief executive, Andrey C. Hicks, who in December pled guilty to five counts of wire fraud and agreed to forfeit his interest in property previously seized by the Justice Department. He was sentenced to 40 months in prison. About $170,000 has been forfeited in the criminal proceeding. Altogether, about $845,000 in assets have been seized from Hicks.
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Andreas Halvorsen’s Viking Global Investors added about 800,000 shares of Triumph Group, bringing its passive stake in the maker of aerostructures, aircraft components, accessories, subassemblies and systems to 5.4 percent.
