Shares of Sears Holdings plunged more than 8 percent to $50.92 after chairman Edward Lampert and his hedge fund firm ESL Partners, which combined constitute the largest shareholder in the company, disclosed they reduced their combined stake to 48.4 percent from 55.4 percent. The Bay Harbour, Florida-based hedge fund used shares in Sears to meet investor redemptions. “We will continue to focus on the transformation of Sears Holdings into a membership-focused company and on creating long-term value for its shareholders,” Lampert reportedly said in a statement. “My significant personal ownership in the company is a sign of my confidence and alignment with all shareholders.” The stock is still up about 20 percent in calendar 2013.
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Carl Icahn is once again trying to talk up the price of Apple. On Tuesday afternoon he tweeted that he gave the maker of the iPad and iPhone “notice we’ll be making a precatory proposal to call for vote to increase buyback program, although not at $150 billion level,” referring to his original recommendation. CNBC subsequently reported that Icahn will send a shareholder proposal with his own proxy seeking support for a $50 billion buyback, or 67 percent less than his original proposal, sometime during the current fiscal year, which ends next September. The proposal, of course, is not binding. With sell-side analysts raising their price targets in recent days and investors starting to buzz again over Apple’s stock, Icahn is apparently sensing that his days of wielding short-term influence over Apple are waning. Indeed, the stock barely budged on the news and for the trading day. Circumstances can change pretty fast sometimes, huh?
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Hayman Capital Management’s Kyle Bass is talking up General Motors’ stock. In an online posting, the Dallas-based hedge fund manager said the car maker is undervalued and poised to rise by more than 40 percent within the next 12 to 18 months as the U.S. government fully exits the stock. “GM equity represents one of the most compelling risk/reward situations of any large cap in the world today,” he states in a presentation posted on Harvest, which bills itself as an online financial markets community. One person who certainly agrees with Bass is Greenlight Capital’s David Einhorn, who has counted GM among his top-five holdings for more than a year. It accounted for more than 10 percent of his equity portfolio at the end of the third quarter. The stock closed up 1.52 percent at $38.72.
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Shares of CGI Group, the parent of CGI Federal, fell 4.15 percent on reports that short seller James Chanos has a major negative bet on the stock. CGI is best known these days as the main contractor in charge of the ill-fated Healthcare.gov. In a 10-page letter to investors, Chanos reportedly cited the “PR mess with the rollout of the Affordable Care Act exchanges, which could reduce the likelihood of future government contracts” and adds that “growing through acquisitions hides deteriorating fundamentals.” The memo also claims CGI’s cash flow is deteriorating.
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Jana Partners reduced its stake in supermarket giant Safeway to 4.1 percent from 6.2 percent. In a regulatory filing, the New York hedge fund firm stated it is highly supportive of the recent steps taken by the company’s board and management, in particular its commitment to exit the Chicago market, its plan to review all of its business to focus on its core operations, its authorization of a significant share repurchase plan and its plan to review its corporate structure. The stock closed down more than 2 percent Wednesday even though the filing was made at 4:00 p.m. The stock dropped another 2 percent to 3 percent in after-hours trading.
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The Credit Suisse Liquid Alternative Beta Index, which tries to reflect the performance of the overall hedge fund industry, rose a mere 0.77 percent in November. This brings the full-year gain to just 6.83 percent. The Managed Futures strategy was the strongest performer in November, posting a 3.08 percent gain. Event Driven is the best performing strategy for the year-to-date, rising 9.97 percent.
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Steve Cohen’s SAC Capital Advisors disclosed a 5.1 percent passive position in The Fresh Market, Inc., an organic food grocery chain.
