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.
Zawya – Shareholders at InvestcorpInvestcorp’s Extraordinary General Assembly today voted to issue a further US$ 40 million of preference shares to meet additional demand from investors who subscribed to Investcorp’s recent capital raise.
Investcorp had received commitments in excess of the $500m of shares that could be issued under the Firm’s current Memorandum of Association. An amendment approved by the shareholders today will enable Investcorp to issue additional preferences shares to cover this oversubscription.
Dow Jones – hedge funds are looking for Kraft Foods Inc. to offer at least GBP11.7 billion for Cadbury PLC as the confectioner’s chief executive, Todd Stitzer, reportedly accused the U.S. food conglomerate of letting Cadbury’s share price “drift.”
One London-based hedge fund manager with an interest in Cadbury stock said most shareholders would be happy to see a valuation of around 15 times the company’s current-year earnings – or roughly 900 pence a share, valuing the chocolate bar maker at GBP12.3 billion – but that 850 pence, or around GBP11.7 billion, would probably be acceptable.
Hedge funds that have disclosed positions in Cadbury include New York-based Eton Park Capital Management and York Capital Management, also based in New York.
Biovail’s long-running battle against several hedge funds and analysts it accused of driving down its stock price has provided lots of drama. Two years ago, Manhattan federal district court Judge Richard Owen sanctioned Biovail for using documents, which were under a protective order, to file a separate RICO suit against the hedge funds and analysts.
(Andrew Longstreth wrote a great American Lawyer feature about the embarrassing hearings before Owen in 2007, in which Biovail’s lawyers at Kasowitz, Benson, Torres & Friedman and Howrey blamed each other for the screw-up.) Then, in February, a couple of plaintiffs lawyers were sanctioned by Newark federal district court Judge Stanley Chesler, who said they’d copied Biovail’s RICO suit in filing a shareholders class against the same hedge funds and analysts. (In a harshly worded ruling (pdf), Chesler also dismissed the suit.)
Forbes – Investor Timothy Barakett on Tuesday said Atticus Capital, which suffered some of the hedge fund industry’s steepest losses last year, is closing two of its three funds and will return $3 billion to shareholders.
The Atticus founder and chief executive told investors in a letter that he is closing down his flagship fund, Atticus Global, and the $600 million Atticus Trading fund ‘solely’ for personal reasons.
The New York Times – Barclays shareholders overwhelmingly approved the bank’s sale of asset manager Barclays Global Investors to BlackRock for about $14 billion (8.3 billion pounds) on Thursday, but staff staged a protest against pension changes.Barclays chairman Marcus Agius told shareholders the bank was in the final days of consultation about controversial changes to its pension plan for UK staff, and could make changes to alleviate concerns and head off the threat of a strike.
Milwaukee Journal Sentinel – Five years after regulators forced the sale of Strong Funds to Wells Fargo and Co. at the height of a national mutual fund scandal, investors in 24 former Strong Funds are moving closer to receiving their share of a $154 million settlement.
A proposal for doling out the money was developed by an independent consultant and has been published on the Securities and Exchange Commission Web site.
The proposal, which awaits SEC approval, would give priority to reimbursing investors in 24 Strong funds whose losses were related to ”frequent trading.” Frequent traders often aim to take advantage of differences between the share price of a fund and the actual value of the securities it holds – a maneuver that can harm the interests of long-term shareholders.
Hedge fund Fortelus and other investors are preparing to oust the management of a publicly listed investment trust because they disagree with its investment decisions, the Guardian has learned. The growing row provides a rare insight into the way hedge funds operate.
Fortelus owns 14% of the shares of Strategic Equity Capital (SEC), a trust managed by London-based asset manager SVG Investment Managers. Along with shareholders representing another 20% of the company’s capital, the rebel group will request management to step down at an extraordinary general meeting to be held in London on 14 August. "We’re launching an EGM to remove the board of this underperforming fund," said one of the investors.
Times Online – SRM Global, the hedge fund that became the largest shareholder in Northern Rock, said yesterday that it would continue its fight for government compensation after losing its second legal challenge.
The fund, which owned 11.5% of Northern Rock, is leading a legal campaign claiming that the Treasury’s compensation scheme, which values former shareholders’ stakes at close to zero, is “unlawful and unfair”.
The legal action was launched in conjunction with RAB Special Situations, another hedge fund, and about 200,000 small shareholders in Northern Rock, many of them former employees of the lender.
Independent – Former shareholders in nationalised bank Northern Rock failed today in a renewed legal challenge to the Government’s "zero return" compensation scheme.
The Court of Appeal in London dismissed an appeal by individual shareholders – including current and retired employees of the Newcastle-based bank – and two hedge funds which also stand to lose out, who had attacked the scheme as "unlawful, unfair and manifestly disproportionate".
They claimed the compensation scheme was deliberately based on false criteria which would lead to shares being valued at zero so the Government would inevitably make a profit when the bank was eventually sold off.
Barron – President Obama took credit Wednesday for the recovery in the financial markets while at the same time decrying Wall Street’s profits and the big bonuses that will be paid out as a result.
In his prime-time news conference, Obama said that if shaming those on Wall Street who take home multi-billion-dollar bonuses doesn’t work, he vowed to make sure shareholders of those companies were made aware of the compensation being doled out.
In the absence of "remorse" of Wall Streeters for raking in big paychecks once again, the president said financial regulatory reform would be necessary to prevent banks from taking risks that he said caused the financial crisis necessitating government bailouts.
Copenhagen Post – The largest business deal in the country?s history could turn into a stock market selloff by the five capital funds that purchased telecommunications company TDC for a record sum in 2006.
The largest business deal in the country’s history could turn into a stock market selloff by the five capital funds that purchased telecommunications company TDC for a record sum in 2006.
The 68 billion kroner acquisition gave the investors control of 88 percent of the shares in the country’s largest telecom and shareholders a 40 percent premium on the value of the shares. At the time, it was Europe’s largest leverage buyout.
Pittsburgh Tribune Review – Tollgrade Communications Inc. is challenging the independence of two nominees for seats on its board of directors because a dissident hedge fund group is paying them to run as part of its bid for control.
Tollgrade, based in Harmar, said the fact that Ramius Group is paying $40,000 for two people to serve as nominees to the board could represent a conflict of interest.
The telecommunications services company is girding for a showdown when shareholders gather to vote at their annual meeting on Aug. 5.
