Hedge Fund News Wrap: Week Ending 6/13/14

Loeb Has a Change of Heart Regarding Sotheby’s

After a bitter battle with the auctioning house, Sotheby’s, hedge fund manager Dan Loeb has had a change of heart.

finance1For months, the activist investor vehemently argued for a change in management and board of directors, which he cited as lacking “leadership and strategic vision.” Loeb compared Sotheby’s CEO, William Ruprecht, to an “old master painting in desperate need of restoration,” and took aim at his salary which “invokes the long-going era of imperial CEOs.”

Now, according to a letter reviewed by the New York Times’ DealBook, Dan Loeb is holding hands with the newly elected board of directors, which includes two individuals he had nominated. In the letter written by Sotheby’s lead independent director, Domenico De Sole, the board of directors voiced their unanimous support for Ruprecht, even though some have questioned his future as Sotheby’s CEO.

Below is the memo sent by Daniel De Sole on behalf of the auction house’s board of directors:

Dear Colleagues:
Sotheby’s newly-elected Board of Directors, including our five new members, met last week in New York. During two days of meetings, the Board discussed strategy, operations, challenges and opportunities. We focused on Sotheby’s core mission — serving our clients — and shared ideas for strengthening our business.

We value your continued commitment to Sotheby’s. Your efforts have produced strong results in most of our businesses and the Company is off to a record start this year. The Board stands behind the management team led by Bill Ruprecht, and is committed to supporting your efforts and providing additional resources, where necessary, to realize our shared goals.

After our constructive and collaborative start, the Board is looking forward to meeting again in August. We are excited about the future of the global art market and focused on improvements to realize Sotheby’s full potential in a highly competitive marketplace. We welcome your ideas during this exciting time.

Domenico De Sole, Lead Independent Director
John Angelo
Jessica Bibliowicz
Kevin Conroy
Duke of Devonshire
Daniel Loeb
Daniel Meyer
Allen Questrom
Olivier Reza
Marsha Simms
Robert Taubman
Diana Taylor
Dennis Weibling
Harry Wilson


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Pershing Square Capital Sues Allergan Regarding Poison Pill

William Ackman’s hedge fund, Pershing Square Capital Management, has sued Allergan to confirm if a push for a special shareholders’ meeting will trigger the adopted poison pill.

Allergan, the maker of Botox, has been the target of a takeover bid from Pershing Square and Valeant Pharmaceuticals. Pershing Square has called for a special shareholders’ meeting in order to rally support from new board members for the $53 billion takeover deal. However, the hedge fund argues that Allergan has not clarified whether or not the meeting would trigger its shareholder rights plan, also known as a poison pill, which would cut shareholders.

“We regret that we are forced to file this lawsuit. Allergan’s failure to confirm that its poison pill does not apply to the actions taken in furtherance of calling a special meeting is a blatant attempt to frustrate shareholders’ ability to express their views and exercise their rights,” said Ackman in a statement.

Pershing Square currently has a 10 percent stake in the company.


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Point72 Bans Instant Messaging for Some Employees

Point72 Asset Management, formerly known as SAC Capital Advisors, is banning instant messaging for some of its employees in an effort to reduce the communication of sensitive and inappropriate information.

Point72, which is now a family office, pled guilty to fraud charges and paid a record $1.8 billion to settle criminal insider-trading charges in November when it operated as SAC Capital Management. Almost a dozen employees were implicated in criminal conduct.

“This prohibition of IMs will reduce the highly informal communications inherent with instant messaging that can lead to confusion and inaccuracy, reflecting our continuing commitment to pursue all reasonable steps to prevent inappropriate information from entering the firm,” wrote Chief Surveillance Officer, Vincent Tortorella, in a memo to employees.

The policy is to take effect on June 16th and applies to money managers, analysts, and managers in long-short and quantitative strategies.


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Bloomberg News

Here Is The City



Detroit Says No to Hedge Fund Manager and His Goats

Last week, hedge fund manager Mark Spitznagel found himself in Detroit’s Brightmoor neighborhood with 18 goats. The idea was to clean up one of Detroit’s most devastated neighborhoods by having the goats graze on public land, hire young individuals to care for them, and eventually sell them to a butcher and pump the profits back into the community.

However, city officials are not so keen on Spitznagel’s plan, and has asked the hedge fund manager and his goats to leave immediately for violating a city ordinance that forbids the raising of wild or farm animals.

The idea differed greatly from others in the finance industry looking to invest in the troubled city. JPMorgan Chase announced that it would inject $100 million into the city’s economy over a five-year period.

According to the Detroit Free Press, some Brightmoor residents were receptive to the idea:

“Brightmoor resident Jermaine Houser said he’s lived in the area for more than 24 years and welcomed the idea of a goat farm on a block that only has one standing home left. Houser said he’s seen several people, including children and teenagers, stop by the farm to pet the goats and learn more about the farm.

“Since we’re in a city that’s strapped for cash, I think we should come up with something like this that’s positive that will help the city,” Houser said.

“The fact that it will bring employment to some in the community, it’s helping the city and businesses around and it’s keeping all of the money in the community. I’ve seen all of these houses burn down and disappear. It’s nice to see something different for a change.”

Spitznagel has yet to comment on the eviction of his goats.


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Deadline Detroit


Smithsonian Magazine