This content is from: Portfolio

The Morning Brief: Citadel to Exit E*Trade Financial; Starboard Zeroes In On DSP Group

Kenneth Griffin’s Citadel is getting out of E*Trade Financial. The hedge fund said it will sell its remaining 27.4 million shares, or 9.6 percent of the outstanding shares, in a secondary offering. The share sale is expected to be completed by March 19. Shares of the bank and discount brokerage company lost 8.21 percent Thursday, closing at $10.85. E*Trade’s stock had been up 32 percent this year. Citadel invested $2.55 billion in the company in November 2007 to help shore up the company, which was struggling with huge losses on mortgages. Reuters reported Citadel realized well over $800 million on its E*Trade investment, citing people familiar with Griffin’s strategy.

Starboard Value is at it again. This time it is targeting DSP Group, a maker of wireless chips. The activist hedge fund said it nominated three or four individuals to be elected to the board at its upcoming annual meeting, including Jeffrey Smith, who heads the fund. In its nomination letter Starboard expects that the terms of three current directors expire this year. If so, Starboard will withdraw one of its nominees.

Several days ago, DSP issued a press release saying it has had many conversations with Starboard in an attempt to avoid a proxy contest “without granting Starboard the power to dictate or block corporate policies,” which it said is not in the best interest of the company and most shareholders. The company added that Starboard’s final proposal included the formation of a new strategic board committee, consisting of four members, two of whom are Starboard nominees and the chairman would be a Starboard nominee as well. “Thus, Starboard’s control of that committee would be negative control, [with] the ability to prevent it from taking any action, not the ability to compel it to act,” DSP said.

John Paulson’s Paulson & Co. cut its stake in CNO Financial Group to 7.6 percent from 9.5 percent in early January. The financial services company owns Washington National Insurance, Bankers Life and Casualty and Colonial Penn Life Insurance.

Leon Cooperman’s Omega Associates disclosed a 5.43 percent passive stake in of Polycom, a maker of videoconferencing products. This represents a 70 percent increase from his position disclosed at the end of the year.

Related Content