Good timing for David Einhorn’s Greenlight Capital. St. Joe Company, its former top executives, and two former accounting department directors agreed to settle charges by the Securities and Exchange Commission that the company improperly accounted for the declining value of its residential real estate developments during the financial crisis. The regulator alleges that the WaterSound, Florida-based real estate developer and landowner materially overstated its earnings and assets in 2009 and 2010. On Wednesday, the stock jumped 1.62 percent on the news, to close at $20.02, presumably because investors were pleased that the uncertainty around the company’s accounting has been resolved, at least.
Greenlight recently told clients in its third-quarter letter than it covered its short position in St. Joe at $17.17. The New York hedge fund firm had shorted the stock at $27.07 nearly 10 years ago. The firm told clients at that time that it feels like it covered the position too early. “We left a lot on the table by not covering the position very well, as the company ultimately achieved our bear case,” Greenlight stated in the letter. But maybe after today’s events, Einhorn is glad he did.
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Shares of Cabela’s surged nearly 18 percent on Wednesday after Paul Singer’s New York-based Elliott Management disclosed it had taken an 11 percent stake in the outdoors specialty retailer and urged the company to put itself up for sale, among other options. The activist cites “the robust environment for private equity investment in retail companies,” potential strategic interest in the company and its “substantial asset holdings.” Elliott asserts in a regulatory filing there are many ways to “unlock significant unrealized value,” including an outright sale of the company, an asset sale, “capital allocation and capital structure optimization,” and certain operational and management initiatives.
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Gates are back. No, Bill is not running Microsoft again. Rather, at least one hedge fund has, for all intents and purposes, erected one of those barriers that irked many investors during the height of the 2008 financial crisis. Claren Road Asset Management, the hedge fund firm owned by private equity giant Carlyle Group, received $2 billion in redemption requests from investors. However, it is telling those disenchanted investors it is only returning about $650 million at the end of October. It will then distribute the rest over the next few quarters, according to a Wall Street Journal report. Claren Road is apparently concerned that if it tried to sell securities to meet the entire $2 billion request at once, it could depress the value of its investments, especially the more illiquid securities.
“Our primary goals are to facilitate the timely return of capital to redeeming investors in a prudent manner and to accomplish this in a way that does not harm continuing investors,” Claren Road reportedly stated in a September 21 letter. “In our estimation, the aggregate amount of redemption requests is too large as a percentage of the fund’s assets to be satisfied in cash in a single payment without unreasonably affecting all investors.”
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Ricky Sandler’s New York-based Eminence Capital boosted its stake in The Men’s Wearhouse to 9.9 percent, probably making the hedge fund firm the largest shareholder of the men’s clothing retailer. Eminence sold around 51,000 shares for between $41.82 and $42.35 a few weeks ago, before purchasing more than 830,000 shares in the past week or so for between $38.67 and $42.31. The stock surged more than 7 percent on the news, to $41.23. New York-based Samlyn Capital owned 4.17 percent of the shares at the end of the second quarter, while Boston-based Adage Capital Partners had a 3.35 percent stake.
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Tiger Global Management made a new private investment, leading the Series A financing of Razorpay, an Indian payments company. According to crunchbase.com, the financing totaled $9 million.
