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The Morning Brief: Safeway Surge Good News for Jana
Shares of Safeway surged more than 8 percent, to $35.57, after published reports speculated that private equity firms, including Cerberus, may be interested in buying the supermarket giant in a leveraged buyout. It makes sense since the private equity firm owns 877 Supervalu stores and 500 Albertson’s stores. Commenting on the report, Deutsche Bank Wednesday said in a note to clients a deal valued at $56 per share “would be very reasonable,” citing potential synergies and valuation based on comparable deals. Otherwise, its target price is $40. These developments are good news for Jana Partners, which recently disclosed a 6.2 percent in the stock. Shortly before the hedge fund made its investment known publicly, the company instituted a poison pill.
Ader Investment Management and Cumberland Associates said they are merging to form Owl Spring Asset Management, which will specialize in activist investing strategies. Owl Spring will be led by co-CEOs Jason Ader, CEO of AIM, and Andrew Wallach, CEO of Cumberland. Cumberland is one of the industry’s oldest hedge fund firms, having been founded in 1970 by Walter Mintz and Donald Cecil. Over the years the firm has had six changes of leadership; it now manages only $105 million in assets. Ader founded his firm in 2003 and previously worked as a gaming, lodging, and leisure industries analyst at Bear, Stearns. Owl Spring plans to focus on small and medium cap issuers in the consumer, real estate, TMT (technology-media-telecommunications) and natural resources industries.
Shares of Netflix rebounded by 2.39 percent, to $330.24, after dropping more than 9 percent on Tuesday. Carl Icahn disclosed after the market closed on Tuesday that he had sold about 3 million of his shares in the stock, or more than half of his stake, in 12 days from October 10 through Tuesday October 22. The septuagenarian investor made more than 450 percent on his original investment in Netflix shares.
Tiger Global sold more of its shares of TAL Education Group, the China-based after-school tutoring services provider, reducing its stake to 12.1 percent.
Brevan Howard’s BH Macro is down 0.30 percent this month, through October 18, trimming its gains for the year to just 1.18 percent, as measured by its U.S. dollar shares, or 1.55 percent for its British pound shares. The fund is a London-listed vehicle that invests virtually all of its assets in the firm’s flagship Brevan Howard Master Fund.