The activist hedge fund arena is maturing to the point where year by year, portfolio managers at large-cap funds decide to strike out on their own, some successfully, some still finding their feet. For its part, Elliott Management has spawned yet another newcomer: Palliser Capital, expected to be launched in the second quarter by Elliott’s former Hong Kong head and three Elliott colleagues. Companies should keep a close eye on actively managed funds appearing in their stock that may not bear a familiar activist name like Starboard or Third Point – but whose portfolio manager comes from that pedigree. The Donerail Group, Senator Investment Group, and Sparta Capital Management are a few additional examples of funds with activist alumni. The roots of the activist family tree grow wide.
Speaking of Elliott, defense technology company Cubic Corporation agreed to go private on Wednesday, a reminder that in addition to being a multi-strategy hedge fund with an aggressive activist component, Elliott also has a private equity arm that buys companies. Elliott’s Evergreen Coast Capital, built and overseen by Elliott’s most high-profile portfolio manager, Jesse Cohn, teamed up with fellow PE firm Veritas Capital to seal the sweetened deal for Cubic Corp. Evergreen has proven to be an outlier – activist fund managers who five years ago dabbled with the idea of pursuing acquisitions have backed off or just used bids as a pressure tactic.
Finally, activist Carl Icahn proved, yet again, that when he puts the pressure on, stuff happens. Bausch agreed to sell a pharma unit this week, which came after Icahn pressure and two board seats. M&A remains the top activist demand across the board.
Have a great weekend,
Mike
