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The Morning Brief: Ackman’s Year in Herbalife
Happy Birthday, Bill. Exactly one year after Pershing Square Capital Management’s William Ackman made his seminal case for shorting Herbalife, shares of the multi-level marketer closed Friday at $80.61, up $1.03 for the day. After Ackman’s presentation on December 20, the stock sank as low as $27.27. Since then he has had to defend his expensive, high-profile short position, even having an epic debate with Carl Icahn on CNBC.
He has also seen other luminaries go long the stock, including rival Daniel Loeb of ThirdPoint, George Soros and veteran consumer products executive William Stiritz. Ackman has since scaled back his short position and replaced much of his negative bet with put options. But he recently suffered a setback when Herbalife’s new auditor, PricewaterhouseCoopers, signed off on the company’s financials for the years 2010 through 2012.
Nelson Peltz’s Trian Partners disclosed in a regulatory filing that it has sold $335.5 million for its Trian Partners Strategic Investment Fund II, its newer private-equity style drawdown fund. It is seeking to sell as much as $2 billion. We earlier reported that in its July 31 letter to investors, Trian’s managers told clients they expect to hold a second closing for Trian Partners Strategic Investment Fund II in the third quarter of this year.
A few hedge fund managers are talking up the logic and possibility of a merger between Sprint and T-Mobile, including Omega Advisors’ Leon Cooperman and York Capital Management’s Jamie Dinan. Sure enough, a report in the Wall Street Journal on Friday said Sprint may bid $20 billion or more for T-Mobile in the first quarter of next year. However, in a note Friday the investment bank Stifel Nicolaus tells clients it thinks the Department of Justice and Federal Communications Commission will oppose a deal.
“We suspect the report is a trial balloon designed to gauge initial government reaction, and we expect any reaction would be chilly, given recent pronouncements, particularly with major spectrum auctions on the horizon,” the investment bank states. It explains that Sprint and T-Mobile are the third and fourth largest carriers in an already concentrated wireless market. It points to an April filing at the FCC signed by Assistant Attorney General William J. Baer, which stressed the marketplace, which includes four major players “is not uniformly competitive.”
Stifel adds that the filing asserts that carriers are able to, and in some cases have the incentive, to exercise some degree of market power. “While Sprint/T-Mobile could fight a DOJ complaint in court, we believe the FCC would likely raise objections and put the merger on hold, making it even more difficult to close the transaction,” Stifel Nicolaus writes.
BlackRock is hoping to raise as much as $3 billion for a hedge fund that will focus on global credit strategies, according to Bloomberg. In October, it began seeking as much as $500 million for BlackRock Credit Alpha Fund.
Hedge fund administrator SS&C GlobeOp said its measure of redemption notifications rose to 5.90 percent in December, from 5.09 percent the prior month. SS&C GlobeOp’s data represents roughly 10 percent of the hedge fund industry. The SS&C GlobeOp Forward Redemption Indicator represents the sum of forward redemption notices received from investors in hedge funds administered by SS&C GlobeOp on the GlobeOp platform, divided by the assets under administration at the beginning of the month for its clients.