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New York (HedgeCo.Net) – Two hedge funds are looking to oust William Dillard II, CEO of Dillard’s Inc., after poor performance and lagging stock prices.
Barington Capital Group LP and Clinton Group Inc sent a letter to the SEC that was released yesterday, which asked the company to start to an immediate search for a new CEO.
"In our opinion, a management team with a comparable record of poor performance at any other company would have been fired long ago," the hedge funds said in the letter.
In addition to sales declining over the course of the year, Moody’s Investors Service warned last week that it may cut Dillard’s credit ratings to junk status.
The hedge funds are also looking to replace some of the other family members who work for the company, saying they are "overpaid and under-qualified for the positions they hold and can be readily replaced with more talented retailers."
The hedge funds claim that William Dillard II makes far more than other CEOs at similar companies. According to a report they cite from advisory firm Proxy Governance, William makes 54 percent above the average, while other executives at Dillard’s make 185 percent above the median.
Dillard’s, in an attempt to avoid a proxy battle with the aggressive hedge funds, agreed to place four candidates from the fund onto the Board of Directors in April.
The hedge funds own almost 6 percent of Dillard’s class A stock. Dillard’s stock is divided into two shares, a move that William made almost four decades ago to guard against takeovers.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) – The SRM Global Master Fund, headed by former UBS AG star trader Jonathan Wood, is down about 85% over the course of its two-year tenure, according to a report by the Wall Street Journal.
Launched in September 2006, the fund grew fast, raising over $3 billion in assets in what was one of the largest European hedge fund kick-offs ever. The fund held long equity positions in companies that were involved in takeovers, mergers or restructurings.
Mr. Wood’s stellar UBS reputation earned him the trust of many affluent investors. However, venturing into a hedge fund is very different territory. Investors agreed to higher than normal lock up periods, some as long as five years, apparently not too concerned about potential risks. Now many are barred from cashing out or even cutting their losses.
The SRM fund has had a string investments gone sour. They held a major stake in Northern Rock, which was nationalized by the British Government last year, causing shares to plummet. Wood is currently seeking a judicial review.
Adding to the unlucky investments is the stake that SRM held in Countrywide. The mortgage lender was taken over by Bank of America for a deal that Wood thought undervalued them greatly. Bank of America ended up with a steal, purchasing Countrywide for $2.5 billion.
One notable investor in SRM is UBS, who in addition to providing their prime brokerage services, allocated about $500 million to the fund.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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International Herald Tribune – Blackstone Group, manager of the world’s largest leveraged-buyout fund, said Wednesday that second-quarter profit beat analysts’ estimates as gains from hedge funds offset a decline in private-equity takeovers.
Net economic income, a measure that excludes some compensation costs, fell 75 percent to $165.6 million, or 15 cents a share, from $655 million, or 58 cents, a year earlier, the New York-based Blackstone said. That exceeded the average estimate of 8 cents a share by 10 analysts in a Bloomberg survey. Revenue declined 63 percent to $353.7 million.
Blackstone’s fees from buying and selling companies have plunged as buyouts of more than $2 billion dried up and initial public offerings fell to their lowest in four years. Investors backed away from the debt used to finance LBOs in the fallout from the collapse of subprime-mortgage securities in the second half of last year.
New York (HedgeCo.Net) – Eight people were arrested yesterday in London on suspicions of insider trading.
The city of London police and about 40 Financial Services Authority officials targeted workers at UBS and JPMorgan Cazenove, in what they are calling “a major ongoing investigation into insider dealing rings.”
It is believed that the suspected individuals shared price-sensitive information contained at the bank’s printing facilities that had not yet been made available to the public.
Ironically, Malcolm Calvert was indicted last week, also from Cazenove who allegedly used inside info to purchase huge stakes in companies that were rumored to be potential targets for takeovers from 2003-2005. It is unknown as to whether or not the two instances are related.
Names have not been released, but the FSA did confirm to the Financial Times that one of the men arrested was a junior member of UBS’s support staff in London. He is currently suspended while the investigation unfolds.
As for the others, the FSA has only confirmed that they are men between the ages of 27 and 48. No word yet on how much money the individuals are thought to have gained through the insider deals.
This marks the third insider trading case filed by the FSA this year. The City of London police were asked to get involved, as the FSA does not have the authority to arrest.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
