Tag: Elliott Management Corp

Ontario Teachers’ Pension Partners With PE Firm to Buy Computer Networking Company

flying moneyThe Ontario Teachers’ Pension Plan is no stranger to direct investing – the pension fund has an entire arm devoted to it, called Teachers’ Private Capital (TCP).

It was revealed Monday morning that TCP, along with a private equity firm, have agreed on terms to buy computer-networking company Riverbed Technology Inc.

Reported by Bloomberg:

Riverbed Technology Inc. (RVBD), under pressure from activist investor Elliott Management Corp., agreed to be acquired for about $3.6 billion by private-equity firm Thoma Bravo and pension investment group Teacher’s Private Capital.

Riverbed stockholders will receive $21 a share in cash, Riverbed said in a statement today. The agreement represents a 12 percent premium over Riverbed’s Dec. 12 closing price. The computer-networking company said in October it hired advisers to review strategic alternatives.

Elliott acquired a 10 percent stake in Riverbed last year and pushed the company to examine the business, saying it was “significantly undervalued.” It made an unsolicited bid in January and raised the offer to $21 a share the following month. Since then Elliott has been in a tug of war with Chief Executive Officer Jerry Kennelly about selling his company.

“We’re delighted with this outcome that gives shareholders immediate, premium value,” Jesse Cohn, Elliott’s activist portfolio manager, said in a statement today.

Riverbed jumped 9.4 percent to $20.50 at 9:31 a.m. New York time. The shares had gained 5 percent since Jan. 7, the last trading day before Elliott made its first bid, through yesterday.

Kennelly will remain with Riverbed in the same position, the company said today.

Earlier this year, Thoma Bravo was one of several buyout firms including Silver Lake Management LLC and KKR & Co. that informally expressed interest in San Francisco-based Riverbed with offers approaching $25 a share, said people with knowledge of the process at the time.

 

Photo by 401kcalculator.org

Paul Singer: CalPERS’ Hedge Fund Exit Was “Off-Base”

Paul Singer

Paul Singer, a hedge fund manager, activist investor and billionaire, wrote in a recent letter to clients that CalPERS’ exit from hedge funds was “off-base”.

CalPERS said at the time that its decision to exit hedge funds was based on their “complexity, cost and the lack of ability to scale at CalPERS’ size”.

Singer responded to those criticisms, according to CNBC:

“We are certainly not in a position to be opining on the ‘asset class’ of hedge funds, or on any of the specific funds that were held or rejected by CalPERS, but we think the decision to abandon hedge funds altogether is off-base,” Singer wrote in a recent letter to clients of his $25.4 billion Elliott Management Corp.

[…]

On complexity, Singer wrote that it should be a positive.

“It is precisely complexity that provides the opportunity for certain managers to generate different patterns of returns than those available from securities, markets and styles that are accessible to anyone and everyone,” the letter said.

Singer also took issue with claims that drawbacks of hedge funds include opaqueness and high fees. From CNBC:

“We also never understood the discussions framed around full transparency. While nobody wants to invest in a black box, Elliott (and other funds) trade positions that could be harmed by public knowledge of their size, short-term direction or even their identity.”

Singer also slammed CalPERs for its complaint about the relative high cost of hedge funds.

“We at Elliott do not understand manager selection criteria based on the level of fees rather than on the result that investors could reasonably expect after fees and expenses are taken into account,” he wrote.

The broader point Singer makes is on the enduring value of hedge funds to diversify a portfolio.

“Current bond prices seem to create a modest performance comparator for some well-managed hedge funds. Moreover, stocks are priced to be consistent with bond prices, and we have a hard time envisioning double-digit annual stock index gains in the next few years,” the letter said.

“Many hedge funds may have as much trouble in the next few years as institutional investors, but investors should be looking for the prospective survivors of the next rounds of real market turmoil.”

Hedge funds have returned 2.92 percent this year, according to Preqin. Singer’s hedge fund, Elliott Associates LP, has 13.9 percent annually since 1977.

 

Photo by World Economic Forum via Wikimedia Commons