Vivendi is the latest large company to cave in to activist hedge fund demands. The Paris-based media giant said it will raise its payout to shareholders after all, as part of a settlement with New York-based P. Schoenfeld Asset Management. The company said in a press release Wednesday that it plans to institute an additional distribution of two euros per share, with half paid out in the fourth quarter and the other half in the first quarter of 2016. These distributions are in addition to Vivendi’s existing plan to pay out a one-euro dividend per share in both fiscal 2016 and 2017. “Furthermore, Vivendi will review the possibility to propose additional distributions if its acquisition strategy were to require less cash than anticipated over the next two years,” it added. “These distributions demonstrate our willingness to reach a consensus with some of our minority shareholders, even if it may result in reduced flexibility for Vivendi in the implementation of its strategic ambition to build a major media and content group,” said Arnaud de Puyfontaine, chairman of the management board, in a statement. Under the deal, P. Schoenfeld agreed to withdraw resolutions it planned to present at the shareholders’ meeting on April 17. The hedge fund has publicly called on Vivendi to boost its payout in an effort to reward shareholders but had pledged not to launch a proxy fight.
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HFR’s Weighted Composite Index rose 0.5 percent in March, bringing the gain for the first quarter to 2.4 percent. The Chicago-based data collector called this the strongest quarter of outperformance relative to the Standard & Poor’s 500 since the third quarter of 2011. The performance, however, was less than the 3.2 percent average gain reported by Lyxor’s Managed Account Platform Research team. HFR says March results were driven by strong macro trends in currency and commodity markets, as well as broad-based gains and positioning in event-driven, equity-hedge and fixed income-based relative-value arbitrage strategies. Macro was the best performer in the first quarter among four broad strategies, led by trend following, quantitative CTA strategies.
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Deutsche Bank sharply raised its price target on hedge fund favorite, Bridgewater, New Jersey-based Valeant Pharmaceuticals International, from $141 to $200, citing the incorporation of the company’s April 1 acquisition of Raleigh, North Carolina’s Salix Pharmaceuticals. “We now model materially higher sales relative to our prior standalone Salix model,” the bank said in a note to clients Wednesday. Even so, Deutsche is keeping its rating on the stock at Hold, stressing that it already reflects financial benefits of the acquisition, including generous assumptions for growth in Xifaxan, an antibiotic which treats traveler’s diarrhea. Three of the top seven investors at the end of the fourth quarter were high-profile hedge funds, including long-time shareholder ValueAct Holdings of San Francisco, the second-largest overall. Other top hedge fund investors include Viking Global Investors and Lone Pine Capital, both based in Greenwich, Connecticut. The stock Wednesday rose 3.5 percent to close at $205.96.
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Deutsche Bank also raised its price target on another hedge fund favorite, Dollar General. It boosted its expected price from $80 to $85 after a meeting with the discount retailer’s management. “While many domestic retail stocks took a hit this week on higher oil prices and weak labor data, we came away bullish on the consumer and DG’s opportunity to drive the top-line,” the bank said in a note. The German bank added that Dollar General is well positioned to drive mid- to high-teens earnings per share growth while also raising its dividend payout ratio. Deutsche retained its Buy recommendation. Last year, Dollar General failed in its bid to acquire rival Family Dollar, which instead wound up accepting an offer from Dollar Tree. Four hedge funds ranked among the top-nine holders at year-end: Lone Pine Capital, Soroban Capital Partners, OZ Management and Glenview Capital Management.
