Reuters – A hedge fund group holding 11 percent of developer California Coastal Communities Inc. (CALC.O: Quote, Profile, Research) on Thursday told thecompany to sell a key asset and give the money to shareholders.
The fund, Mellon HBV Alternative Strategies, told the Irvine, California-based company that it should auction off its 105-acre Bolsa Chica mesa site in southern California overlooking the Pacific Ocean. The company recently won approval to build on the site overlooking Huntington Beach, and plans a 349-home development there.
The Mellon HBV demand comes amid a spate of activist moves by hedge funds, who typically buy large stakes in underperforming companies and demand strategic changes to make a quicker return. Often such demands escalate into proxy contests for board seats.
Mellon HBV, a unit of Mellon Financial Corp. (MEL.N: Quote, Profile, Research), said it “did not want to assume the risk of developing the property nor wait two years before recognizing a return on our investment,” according to a letter to the company it filed with the U.S. Securities and Exchange Commission.
“We would suggest that if management wants to assume that risk (of developing the property), they and any stockholders with a similar view can do it themselves by taking the company private,” said Mellon HBV in the letter.
