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The Morning Brief: BlueMountain Protests REIT’s Rebuff

BlueMountain Capital Management said it is “disappointed” by Chatham Lodging Trust’s rejection of the hedge fund firm’s offer to acquire the real estate investment trust (REIT) for $21.50 per share, as well as other actions. “BlueMountain remains committed to the belief that a sale transaction or business combination is in the best interests of the company, its shareholders, employees and customers and is considering its options in response to the rejection of its offer,” BlueMountain stated in a regulatory filing. The New York-based firm, which owns 4.8 percent of Chatham’s shares, is apparently unhappy with the REIT’s decision to institute a classified board, staggering the election of its directors over three years. Most shareholder activists and governance experts recommend that all directors stand for election annually. The company said it will declassify the board in two years “in order to emphasize that the classified board is solely intended to protect value and is not intended to be a permanent feature of the company’s corporate governance.” Chatham also said it has adopted certain bylaw amendments.

Meredith Whitney received about $50 million from Michael Platt’s BlueCrest Capital Management and other investors for her new hedge fund, which launched November 1. Whitney’s Kenbelle Capital, which invests in U.S. equities, is looking for annual returns of 12 percent to 17 percent, according to a Bloomberg report. Whitney, a former financial services analyst, has enjoyed mixed success from a series of bold predictions. She correctly warned that Citigroup would cut its dividend in 2008 but her warnings of an apocalypse in the municipal bond market never materialized.

Steve Cohen’s SAC Capital Advisors reported it had an $18.5 billion U.S. equity portfolio at the end of the third quarter, up from $18.2 billion three months earlier. The firm, whose main fund is up 16 percent year-to-date, disclosed it has a big hedge on the direction of the broad market. Its largest position is put options on an exchange traded fund (ETF) that tracks the S&P 500, while in the third quarter its largest new position is an offsetting call position on the same ETF. Rounding out its top five holdings are Yahoo!, semiconductor maker Micron Technology Inc. and Zoetis Inc., an animal health company that was formerly part of Pfizer Inc. Rounding out his top five new positions: casual dining restaurant Panera Bread, energy giant Apache, online game maker Zynga Inc. and conglomerate Trinity Industries Inc.

In separate 13G filings that reflect activity since the end of the third quarter, SAC said it owns 7 percent of Armstrong World Industries Inc., a maker of flooring and ceiling products, and 5.2 percent of KAR Auction Services Inc., the holding company for ADESA Inc., a provider of wholesale used vehicle auctions, Insurance Auto Auctions Inc., a salvage-vehicle auction company, and Automotive Finance Corp.

Paul Singer’s Elliott International raised its stake in German drug distributor Celesio AG to 21.13 percent of the voting rights from 15.15 percent as of October 31, according to Reuters. Celesio earlier received an $8.3 billion takeover offer from U.S.-based McKesson Corp.

The 100 Women in Hedge Funds annual New York Gala event raised $1.27 million on Wednesday night to benefit Best Buddies International, which seeks to help people with intellectual and developmental disabilities. In addition, Barbara Novick, vice chairman of BlackRock Inc., received the association’s Effecting Change Award. Also, 100WHF presented its 2013 U.S. Industry Leadership Award to the late Karen Cook, former chief investment officer of Steinhardt Management. She passed away October 2 from progressive supranuclear palsy, a rare neurodegenerative disease.

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