Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
Bloomberg – Massachusetts will cut investments in hedge funds after its public pension plan lost a record 24 percent on all assets in the fiscal year ended June 30.
The state pension plan’s board of trustees voted today to lower the amount of money invested in hedge funds to 8 percent, or about $3 billion of the $37.7 billion it oversaw at the end of June, from 12 percent, which is about $4.5 billion. The vote reversed a five-year effort by the pension system to boost returns by expanding such alternative investments.
”We all have to understand we’re making a bet on what assets will do well,” said state Treasurer Timothy Cahill, chairman of Massachusetts’s pension reserve investment management board. “Ultimately, we don’t make decisions based on the short-term, but we get measured on the short-term.”
HedgeCo.net (West Palm Beach) – Hedge fund founder J. Winder Hughes, III, has joined wastewater treatment and power generation technology company, ThermoEnergy Corporation, on the Company’s Board of Directors.
Hughes is the Managing Director of the private equity firm of Hughes Capital Investors, LLC. In 2000, Hughes formed the Focus Fund, LP, a Florida-based, highly concentrated equity partnership that focuses on publicly-traded emerging growth companies. Over the past two years, the Focus Fund has become one of the largest investors in ThermoEnergy Corporation.
"We are extremely pleased that Mr. Hughes accepted our invitation to join the board of ThermoEnergy Corporation," said Dennis C. Cossey, ThermoEnergy’s Chairman and CEO. "With his extensive background in corporate finance and investment banking, Mr. Hughes represents a tremendous resource on which the ThermoEnergy management team can rely on."
"Given that the Company is on the cusp of commercial prosperity with its wastewater treatment business and at the forefront of achieving value-creating milestones with its Babcock-Thermo Carbon Capture joint venture," said Mr. Hughes, "I look forward to working with the management team to strengthen the company’s financial stability and improve business performance for the benefit of all its stakeholders."
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Private Equity Hub – A group of hedge funds that provided bankruptcy funding to Delphi Corp on Monday won a high-stakes auction to take control of the auto parts supplier, scuttling a rival deal brokered by the Obama administration.
Delphi’s board of directors and GM both offered their support for the proposed deal that would hand the company’s assets over to its debtor-in-possession lenders in exchange for their forgiveness of nearly $3.5 billion in loans.
The result, announced by Delphi late Monday, came after a two-day auction in New York.
Florida Times-Union – CSX Corp.’s proxy fight with two hedge funds ended in September with four nominees from The Children’s Investment Fund Management LLP and 3G Capital Partners Ltd. winning election to CSX’s board.
But even though the fight is long over, it continues to be in the news.
Last week, Securities and Exchange Commission Chairwoman Mary Schapiro told a U.S. Senate subcommittee that the commission is considering new disclosure rules on equity swap arrangements. According to a Bloomberg News story, the SEC’s examination of equity swaps is a direct result of CSX’s battle with TCI and 3G.
Times and Democrat – Activist shareholder William Ackman sought for months to replace four incumbents on the Minneapolis-based retailer’s board of directors with five of his own picks, including himself.
The head of Pershing Square Capital Management, which has a 7.8 percent stake in Target, has argued that the cheap chic discount retailer, which has stumbled as shoppers focus on basics, needed new perspective. He said it especially needed to beef up its board in the areas of retail and real estate to better compete with its chief rival, Wal-Mart Stores Inc., based in Bentonville, Ark.
Shareholders rejected those arguments at their meeting outside Milwaukee Thursday. They also sided with the company in approving a measure that sets the board’s size at the current 12 members, instead of the 13 that Ackman had wanted.
Seeking Alpha – I saw today a very interesting article in the FT about the discussion going on at the SEC about a rule allowing US investors to nominate company directors. Companies at present nominate their own directors. Shareholders have the right to vote, but not to nominate any directors, except through a difficult process that requires them to mail shareholders at their own expense. The new rule would allow large shareholders such as pension funds to nominate up to a quarter of a company’s board members.
Reuters – Hospice-care provider Chemed Corp, which also offers plumbing services under the Roto-Rooter brand, is urging shareholders to reject a hedge fund’s proposal to nominate five dissident directors to Chemed’s board.
Chemed has asked shareholders to discard proxy cards sent by MMI Investments LP, a New York hedge fund, and instead vote for the board’s nominees.
"MMI has one, and only one, idea for your company: to separate immediately Chemed’s businesses – VITAS and Roto-Rooter," Chemed said in a letter on Wednesday.
Daily Times – Less than three weeks ahead of what’s expected to be a heated proxy contest at Target’s annual shareholders’ meeting, activist shareholder William Ackman aims to strengthen his case to investors for a new slate of directors by personally introducing his roster at a town hall meeting here Monday.
According to documents filed Friday with the Securities and Exchange Commission, Ackman, who runs Pershing Square Capital Management, which owns a 7.8 percent stake in the discounter, intends to “improve Target’s board and consequently, help make Target a stronger, more profitable and more valuable company.”
New York (HedgeCo.Net) – Pershing Square Capital head William Ackman is planning to nominate himself, along with four others to the Target Corp. board of directors, in which the hedge fund holds a near 10 percent stake.
Ackman has confirmed that he is nominating former Starbucks CEO Jim Donald, Winthrop Realty Trust CEO Michael Ashner, former bank exec Richard Vague and Ronald Gilson, a professor of law at both Stanford and Columbia, to the discount retailer’s board.
Ackman has been vocal about his intent to spruce up Target’s management in an effort to boost share prices and returns for his investors, while giving the company a better chance at competing with fellow discount chain Wal-Mart.
While Target has experienced lagging stock prices and lower-than-expected sales this past year, they are “disappointed that Pershing Square has decided to pursue a costly and disruptive proxy contest, especially in light of our previous dialogue,” according to a statement. They also said they have been responsive to shareholders while partaking in discussions with the hedge fund over the last 20 months.
Ackman has already allowed investors in his Pershing Square IV Fund to withdraw their capital when the fund, which was invested solely in Target, turned out to be “one of the greatest disappointments of [his] career,” after plunging over 90 percent this year.
Ackman stated that despite the performance, he still has confidence in Target and believes that the new slate of directors will bring an experience to the board that the company is currently lacking.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Auburn Journal – Placer County is pumping money into a North Auburn sewer treatment plant upgrade while seeking federal funding for a pricey regional wastewater pipeline from North Auburn to Lincoln.
No decision has been made to commit to either the $133 million Lincoln tie-in or the $88.5 million Joeger Road plant upgrade.
But Jim Durfee, county facility services director, told supervisors at Tuesday’s board meeting that moving ahead on a no-bid contract with design firm Owen Psomas would signal to water-quality officials that efforts were continuing to move the North Auburn plant into compliance with new standards.
ReportonBusiness.com – A group of dissident shareholders enraged over HudBay Minerals Inc.’s corporate missteps is pressing on with plans to oust the company’s board even after the resignation of the mining firm’s embattled chief executive officer.
HudBay said yesterday that Allen Palmiere, the architect of HudBay’s recent failed merger attempt with Lundin Mining Corp., resigned as an officer and director of the Toronto company. HudBay director Colin Benner, the former head of Lundin, Skye Resources Inc. and EuroZinc Mining Corp., was appointed interim CEO.
San Diego Union Tribune – The county pension board’s chief investment officer has resigned a week after a second hedge fund collapse in which employee retirement investments could lose as much as $78 million.
David Deutsch, who held the job for five years, oversaw a $2.5 billion loss in pension assets since June 30.
He had pushed the San Diego County Employees Retirement Association – which manages retirement benefits for 35,000 county retirees and current employees – to invest heavily in hedge funds.
The association’s board accepted his resignation in closed session yesterday. His last day will be March 19.
Brian White, the association’s chief executive, said Deutsch didn’t give a reason for his departure and wasn’t given a severance package.
Asked if Deutsch was under any pressure because of investment losses or hedge fund problems, White said, “I think we’re all under a lot of pressure because of the market.”
