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Top Activist Stories - A Review of Financial Activism by Geneva Partners

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  1. 1. T O P A C T I V I S T S TO R I E S A REVIEW OF FINANCIAL ACTIVISM BY GENEVA PARTNERS January 31st,2013 PLEASE SCROLL DOWN FOR ARTICLES TCI plea to raise prices has no legal basis: Coal IndiaCoal India (CIL) has hit back at The Childrens Investment Fund, saying the fund has no business to try and forcethe state firm to raise prices for the interest of a particular shareholder, and that the company and its directorsare under no obligation to sell coal at international prices. […] Singer Chases Icahn Gain With Stake in Cheapest Oil Company HessBillionaire Paul Singer’s best chance to maximize his potential $800 million investment in Hess Corp. (HES) maybe to press for a sale of the whole company after the oil and gas producer exits its refining and storagebusinesses. […] Canadian Pacific Meets Estimates as Ackman CEO Boosts EfficiencyCanadian Pacific Railway Ltd. posted fourth-quarter earnings that matched analysts’ estimates as the chiefexecutive officer backed by investor William Ackman targets profitability goals set during a proxy fight. […]Canadian Pacific Railway Ltd. posted fourth-quarter earnings that matched analysts’ estimates as the chief Chesapeake CEO Resigns After Scrutiny on Personal Loansexecutive officer backed by investor William Ackman targets profitability goals set during a proxy fight.[…]Chesapeake Energy Corp. (CHK) Chief Executive Officer Aubrey McClendon was forced to leave the second-largest U.S. natural gas producer under pressure from his two biggest shareholders […] Agrium Says No Reason to Compromise for Jana PartnersAgrium Inc. (AGU) Chief Executive Officer Mike Wilson said there is no reason for his company to compromisewith activist shareholder Jana Partners LLC’s demands for change at the largest retailer of fertilizer and seedsto U.S. farmers. […] Icahn Domain Pops Up After Herbalife Hedge Fund FightFirst, hedge fund titans Bill Ackman, Carl Icahn and Daniel Loeb tussled publicly over whether Herbalife Ltd.(HLF) is a pyramid scheme. Now their names are popping up online in ominous-sounding domain names,including “” and “”[…] Jana Buys Copart Shares on REIT Conversion Catalyst PotentialJana Partners LLC, the activist hedge fund run by Barry Rosenstein, bought shares of Copart Inc. in a bet the carauction company may convert into a tax- efficient real estate investment trust.[…] 1GENEVA PARTNERS – 33 Quai Wilson – 1201 Geneva – Switzerland – Tel. : +41/22 906 95 95 – –
  2. 2. T O P A C T I V I S T S TO R I E S A REVIEW OF FINANCIAL ACTIVISM BY GENEVA PARTNERS January 31st,2013 TCI plea to raise prices has no legal basis: Coal IndiaBy Debjoy Sengupta by TCI. for relief is without factual and legalJanuary 28th, 2013 However, it said that CIL directors are basis," CIL said. CIL also mentioned under no obligation to match that the Red Herring Prospectus for Coal India (CIL) has international prices and it has no CILs initial public offer disclosed allhit back at The Childrens Investment nexus with international prices. risk factors. The RHP clearly stated:Fund, saying the fund has no business Nevertheless, CILs coal is for "We sell coal at prices lower than theto try and force the state firm to raise indigenous consumption and that it is international prices...interest ofprices for the interest of a particular meant to be cheaper than government of India may conflict withshareholder, and that the company international coal. your interest as a shareholder."and its directors are under no The coal company is "TCI has invested in CILs shares at theobligation to sell coal at international to profit but it is not in the business of time of the IPO which assumes thatprices. profiteering and mechanically fixing the fund is well aware of the risks. TCICIL, which is facing a lawsuit from the domestic prices to international would not have invested in thefund, says the allegations made by standards will be injurious to the company if they had any issues withTCI, a shareholder, are hypothetical domestic consumers. CIL also says the functioning of CIL. Further, TCI hasand speculative which has no basis in that its directors are under no continued to increase its stakefact or in law. The fund has filed a obligation to consider mere subsequently in the in the Calcutta High Court profitability or benefits for a single Therefore, after reading the RHP oneagainst the company, its directors and shareholder. It is not the sole cannot turn around and complainthe government of India alleging it guideline that governs the decision about the risk factors," it said in itshas acted against the interest of making process of CIL. response.minority shareholders by not "Nevertheless, CILs pricing is the However, CILsmatching prices with international subject matter of CIL as prices are profit has risen substantially in thestandards which has caused loses to non-regulated and TCI cannot last financial year and during the lastCIL. interfere in such matters which Annual General Meeting no objection It is scheduled to be involve larger commercial factors," it was raised by any shareholder whenheard on January 30. In response to said. its accounts were adopted. "TCIsthe allegations CIL has informed the CIL also submitted representative attended the AGM butcourt that pricing of coal cannot be that making any representation to the they raised no objection on finances,"based solely on profit motivations and Parliamentary Standing Committee & CIL said.the managements decision of fixing central Electricity Authority is CILs The company denied any fraud or itpricing with respect to fuel supply sole prerogative and CIL cannot act has done any special damage to theagreements is within the powers of upon the advises of TCI in making minority shareholders. It also deniedthe President of India. such representation. The coal that directors failed to manage CIL inThe power of controlling prices is also monopoly has notified coal prices accordance with commercial probity.vested with the management and the keeping in view public interest at It also denied CIL suffered losses of Rsgovernment of India. Therefore TCI large and in view of sustained growth 215250 crore as alleged by TCI.does not have any legal right in this of the economy with respect toregard. Thus "relief claimed by TCI in sectors like power and steel.this regard is not tenable," CIL said in Therefore short tern profitability isits response. CIL also denied that the not the sole objective of the coaldecisions taken by the directors was company. "TCI has no legallynot in the commercial interest or was enforceable right in this regard andnot economically prudent as claimed the cause of action sought to be made Source : The Economic Times 2GENEVA PARTNERS – 33 Quai Wilson – 1201 Geneva – Switzerland – Tel. : +41/22 906 95 95 – –
  3. 3. Singer Chases Icahn Gain With Stake in Cheapest Oil Company HessBy Bradley Olson and David Wethe CVR’s assets into a master limited drove down the price of its bonds.January 29th,2013 partnership on Jan. 16. Hess’s $1.25 billion of 5.6 percent notes due February 2041 fell 4.66 Billionaire Paul Doubled Investment cents yesterday to 111.56 cents onSinger’s best chance to maximize his the dollar to yield 4.84 percent,potential $800 million investment Jana Partners LLC according to Trace, the bond-pricein Hess Corp. (HES) may be to press bought 19.7 million shares reporting system of the Financialfor a sale of the whole company after in Marathon Petroleum Corp. Industry Regulatory Authority. That’sthe oil and gas producer exits its (MPC) before the company the biggest decline since the debt wasrefining and storage businesses. announced plans to spin off some of issued in August 2010.[…]Hess, which in 80 years developed its pipeline assets. Marathonfrom a one-truck fuel deliverer to a Petroleum rose 89 percent in 2012, Bondholder Concernglobal wildcatter that finds and while CVR more than doubled itsextracts oil from West Africa to North share price. The implication ofDakota, is among the cheapest energy Singer may find the easier path to the move by Elliott Associates is thatopportunities in North America. The increasing value is advocating for a Hess has not moved aggressivelyNew York-based producer trades at sale of part of Hess’s stakes in oil and enough in its restructuringthe lowest valuation of any so-called gas fields such as those offshore efforts, Phil Adams, a senior analyst atintegrated oil company, such as Exxon Ghana or in the North Sea, Gianna Gimme Credit LLC in Chicago, wrote inMobil Corp. (XOM), on the Standard & Bern, principal of Brookshire Advisory a note to clients yesterday. “ThePoor’s 500 Index, according to data & Research Inc. in Chicago, said in a concern for bondholders would becompiled by Bloomberg. telephone interview yesterday. He that Elliott Associates wouldSinger, whose Elliott Associates LP also might urge returning more cash successfully agitate for a morenotified Hess Jan. 25 that it intends to to shareholders through share aggressive return of cash tobuy more than a 3.75 percent stake buybacks, or through a spinoff of the shareholders.”and may seek board seats, would company’s gas station business. Hess’s quarterly earnings, afterbecome the fourth activist investor in “Bringing in additional partners on adjusting for one-time items, havethe past year to wrest profit from those assets or exiting less efficient declined from a year earlier in fourenergy company restructuring. businesses are some of the low- out of the past five quarters,“Elliott is trying ultimately to get the hanging fruit that these investors may according to data compiled byvalue of this company up, whether pursue,” she said. Bloomberg. Hess, which reportsthrough a sale or another fourth-quarter results tomorrow, ismeans,” Louis Meyer, a New York- Rising Value expected to earn $1.23 a share, aboutbased special situations analyst at 5 percent higher than adjustedOscar Gruss & Son Inc. “There are Hess, with a market earnings a year ago, according to themany ways to get a stock price up. value of $21 billion as of yesterday, average of 21 analyst estimates.That is one arrow that can be shot. has risen 13 percent in the past year Singer might push Hess to lower itsWhether a company has armor or as it closed an unprofitable refinery capital spending budget as a way totakes this seriously is another and ramped up operations offshore make its debt and other obligationsquestion.” Norway and in North Dakota’s Bakken more manageable, Phil Weiss, anSinger’s interest in Hess recalls the oil fields. Hess rose 6.1 percent to analyst at Argus Research in Newdecision by Murphy Oil Corp. $62.48 at the close in New York, said yesterday in a telephone(MUR) last year to spin off its retail York yesterday. interview. Lower spending “reducesfuels segment after hedge fund Third Hess’s shares trade at a multiple of the need to raise cash,” he said.Point LLC bought a stake and urged 3.1 times earnings before interest, Chairman and Chief Executive Officerthe El Dorado, Arkansas-based taxes, depreciation and amortization, John Hess probably wouldn’t agree tocompany to shed assets. Carl the lowest of any energy company on a sale of the whole company that wasIcahn nearly doubled his $2 billion the Standard & Poor’s 500 Index that founded by his father, Weiss said.investment in CVR Energy Inc. has gasoline stations, according to(CVI) after urging the company to sell data compiled by Bloomberg. Activist Recorditself and acquiring an 82 percent Fears that Singer’s efforts to increasestake through a proxy fight. After returns to shareholders might harm Singer is the founder and president offailing to find a buyer, Icahn spun off the company’s ability to pay debt Elliott Management Corp. which …. 3GENEVA PARTNERS – 33 Quai Wilson – 1201 Geneva – Switzerland – Tel. : +41/22 906 95 95 – –
  4. 4. oversees two funds, Elliott Associates Peter Truell, a spokesman for Elliott, investors.and Elliott International LP, that have declined to comment when reached Some analysts also expect more$21.5 billion of assets under by phone yesterday. pressure on Hess to spin off its retailmanagement. Elliott Associates fuels business, which includes morenotified Hess that it’s seeking U.S. Preemptive Move than 1,350 Hess- branded sites in 16regulatory approval to buy Hess Hess responded to states along the U.S. East Coast, toshares “beyond those they may Elliott’s interest with an focus the company exclusively onalready own, if any,” Hess said announcement yesterday morning of exploration and production.yesterday in a statement. Hess said a restructuring plan that included “We would not be surprised to seeElliott’s notification suggested it selling its storage business, closing its Elliott pursue a retail spinoff, which iswould acquire shares valued at more last refinery, and refocusing its a logical step to complete thethan $800 million. spending on developing U.S. oil and company’s transition,” MolchanovElliott also told Hess it may seek gas assets. Exiting refining would help wrote. Hess plans to continue its long-board seats at the company’s annual save $1 billion in costs, Hess said. A term commitment to the retail andshareholder meeting this year, sale of its fuel storage business may energy marketing business, Jonaccording to a release from the fetch as much as $2 billion, Paul Pepper, a spokesman for Hess, wrotecompany yesterday. Elliott has Cheng, a New York-based analyst yesterday in an e-mail.advocated for a sale recently of at Barclays Plc (BARC), said yesterday Hess has retained Goldman Sachssoftware companies in a note to investors. Group Inc. (GS) as its financial adviserincluding Compuware Corp. Hess’s restructuring announcement on the terminal sales.(CPWR) and BMC Software Inc. (BMC), appeared to be an attempt to deflectoffering last month to buy pressure from Elliott Associates, PavelCompuware outright and adding two Molchanov, an analyst at Raymondboard seats to BMC. James, wrote yesterday in a note to Source : Bloomberg Canadian Pacific Meets Estimates as Ackman CEO Boosts EfficiencyBy Frederic Tomesco “We continue to expect material value the market will ascribe to theJanuary 29th, 2013 improvement in efficiency, change in pension expense productivity and earnings, but the assumptions -- which we note are set Canadian Pacific Railway share price move has gone beyond at the discretion of management.”Ltd. posted fourth-quarter earnings that,” Walter Spracklin, an analyst […] The stock has gained 15 percentthat matched analysts’ estimates as at RBC Capital Markets in Toronto, this year, outpacing an advance of 3.2the chief executive officer backed by said yesterday in a telephone percent by Canada’sinvestor William Ackman targets interview. benchmark Standard & Poor’s/TSXprofitability goals set during a proxy On an adjusted basis, the operating Composite Index.fight. ratio, an industry benchmark that Forecasts for 2013 assume that fuelExcluding some items, profit was compares expenses to sales, will cost $3.45 a gallon, on average,C$1.28 a share, in line with the improved to 74.8 percent from 78.5 the company said. Canadian Pacificaverage of 28 estimates compiled by percent a year earlier, Canadian expects to pay a tax rate of 25Bloomberg. Profit on that basis in the Pacific said. percent to 27 percent.same period a year ago was C$1.11. Pension expenses will probably beRevenue rose 6.7 percent to C$1.5 Revenue Forecast C$50 million to C$60 million this yearbillion ($1.49 billion), Calgary-based Canadian Pacific predicted and next, before rising to C$90 millionCanadian Pacific said today in a a revenue increase “in the high single to C$110 million in 2015 and 2016,statement. digits” this year. Operating ratio will Canadian Pacific said.Chief Executive Officer Hunter probably be “in the low 70s,” while Including C$39 million in workforce-Harrison is working to rid Canadian diluted per-share earnings climb by reduction expenses, C$111 million toPacific of its status as North America’s more than 40 percent. That implies a write down investments such as theleast efficient railroad, based on forecast of C$6.08 a share, based on Powder River Basin coal reserve’s railoperating ratio. Harrison, a former 2012 results, topping analysts’ network and other items, net incomeCEO of rival Canadian National estimates of C$5.78 a share. fell 93 percent to C$15 million, or 8Railway Ltd., took over June 29 after “This was driven entirely by a material cents a share, from C$221 million, orAckman, a hedge-fund manager and reduction in the company’s pension- C$1.30, a year earlier. The operatingactivist investor, won his proxy expense assumptions,” Spracklin said ratio on that basis was 96 percent.campaign to remove then-CEO Fred in a note to clients today. “We are atGreen. this point uncertain as to how much Source : Bloomberg 4GENEVA PARTNERS – 33 Quai Wilson – 1201 Geneva – Switzerland – Tel. : +41/22 906 95 95 – –
  5. 5. Chesapeake CEO Resigns After Scrutiny on Personal LoansBy Joe Carroll, Zachary R. Mider and $16.1 billion. slumping gas prices.Jim Polson The shareholders who pushed for “You can be the smartest guys in theJanuary 29th, 2013 McClendon’s ouster -- Carl Icahn, the room but you may be in the wrong billionaire activist investor, and O. room,” McClendon said during a Chesapeake Energy Mason Hawkins of Southeastern Asset March interview in a restaurant onCorp. (CHK) Chief Executive Management Inc. -- concluded that the company’s Oklahoma CityOfficer Aubrey McClendon was forced McClendon’s continued leadership campus. “It’s not enough to be theto leave the second-largest U.S. was weighing on the stock, said the smartest guys in the room.natural gas producer under pressure person, who spoke on condition of Sometimes you have to be hungry,from his two biggest shareholders, anonymity because the board’s sometimes you have to be lucky, andsaid a person with knowledge of the discussions are private. you have to be open to change.”matter. Icahn and Hawkins didn’t immediatelyMcClendon will retire from the respond to messages left at their Well-Investment Programcompany he co-founded on April 1 offices after normal business hours.and will serve as CEO until his Icahn and Southeastern together McClendon’s fallsuccessor is appointed, Oklahoma control more than 22 percent of from grace began in April after mediaCity-based Chesapeake said today in a Chesapeake stock, according to data reports about personal loans hestatement. Chesapeake, which lost as compiled by Bloomberg, compared obtained using minority stakes inmuch as 43 percent of its market with McClendon’s stake of less than 1 company-owned wells that he hadvalue last year after a corporate cash percent. The shareholders last year been allowed to gather for his privatecrunch, rose 8.9 percent to $20.66 […] appointed four new directors to the portfolio.The board said it has found no nine-member panel. Chesapeake stock lost 20 percent ofevidence to date of improper conduct its value that month as scrutiny ofby the CEO. ‘Philosophical Differences’ McClendon’s personal transactionsMcClendon, 53, led Chesapeake from compounded the impact of free-its 1989 inception in Oklahoma City, McClendon was the falling prices on a company whoseamassing U.S. gas and oil fields that subject of scrutiny from both the output was more than 80 percent gas.cover an area half the size of New media and regulators after revelations Under an executive perk designed toYork state. As one of the first last year about his borrowings to align McClendon’s personal interestsexplorers to embrace horizontal finance personal stakes in company with those of the company, the CEOdrilling and hydraulic fracturing, wells. The U.S. Justice acquired stakes as large as 2.5McClendon helped usher in a revival Department last year also started an percent in almost every wellof U.S. gas and oil production with investigation into whether Chesapeake drilled during the past 23discoveries such as the Haynesville Chesapeake colluded with a years. McClendon took out loansShale in Louisiana and Utica Shale competitor to suppress prices in land backed by his well stakes to fund hisin Ohio. deals in 2010. portion of costs. At the end of 2011, The board will release its review of he owed $846 million on those loans, Gas Glut McClendon’s financial transactions on the company reported on April 26. Feb. 21, when announcing earnings Federal Investigations The success of the results. Some of the loans came fromdrilling methods led to a glut of North “While I have certain philosophical companies that were involved inAmerican gas that drove prices to a differences with the new board, I look separate financial transactions with10-year low in early 2012, causing forward to working collaboratively Chesapeake. The Internal RevenueChesapeake to cut jobs, pledge to with the company and the board to Service and U.S. Securities andcurtail capital spending and sell more provide a smooth transition to new Exchange Commission began probes.than $10 billion in oilfields and leadership for the company,” McClendon’s departure waspipelines to help close a gap McClendon said in the statement. announced after the close of regularbetween cash flow and drilling McClendon lagged U.S. energy trading on U.S. markets. Chesapeakeexpenses. The company lost $1.07 producers such as Devon Energy Corp. rose 0.2 percent to $18.97 at thebillion during the first three quarters in shifting rigs from gas fields to close in New York. Chesapeakeof last year and net debt ballooned by higher-profit oil prospects, leaving stripped McClendon of his position as56 percent during that period to Chesapeake more vulnerable to chairman in June and named …. 5GENEVA PARTNERS – 33 Quai Wilson – 1201 Geneva – Switzerland – Tel. : +41/22 906 95 95 – –
  6. 6. former ConocoPhillips Chairman companies including Exxon Mobil company said in the 32-pageArchie Dunham to lead a board Corp., Paris-based Total SA and Cnooc presentation published on its website.reconstituted at the behest of the Ltd., China’s largest offshore energy “At the end of the day, asset valuecompany’s largest investors, Icahn producer. and quality will win and today’sand Southeastern Asset Management. “I’m deeply sorry for all of the shareholders should be wellChesapeake plans to halt the well- distractions,” McClendon said on a rewarded.”investment program with McClendon May 2 conference year rather than the original The company called reports oftermination date at the end of 2015. McClendon’s personal finances “anMcClendon leaves to his successor a unprecedented, negative mediagoal of raising billions of dollars from campaign” in a May 22 presentationasset sales this year to close the prepared for a UBS AG energyfunding gap and reduce the debt load. conference in Austin, Texas. “While damaging in the short run to ‘Deeply Sorry’ our reputation, these attacks have failed, and will continue to fail, to McClendon raised reduce the value of the company’smore than $30 billion since 2008 assets and our long-termselling burgeoning shale assets to attractiveness to investors,” the Source : Bloomberg Agrium Says No Reason to Compromise for Jana PartnersBy Christopher Donville “The bottom line is their arguments Jana’s nominees to Agrium’s boardJanuary 28th, 2013 are flawed -- our retail is a fantastic include Rosenstein, David Bullock, a operating business, our growth is former chief financial officer of Agrium Inc. great and our integrated strategy is Graham Packaging Inc., and Stephen(AGU) Chief Executive Officer Mike paying off,” Wilson said today Clark, the former chief executiveWilson said there is no reason for his from New York in a phone interview officer of German chemicalscompany to compromise with activist with reporters. “So why would you distributor Brenntag AG (BNR),shareholder Jana Partners LLC’s compromise when their position is so according to the statement. The otherdemands for change at the largest flawed?” two nominees are Mitchell Jacobson,retailer of fertilizer and seeds to U.S. Jana’s plans are unnecessary, Wilson chairman of MSC Industrial Direct Co.,farmers. said. The hedge fund’s proposals and Lyle Vanclief, a former CanadianJana is seeking to replace five of would cause “huge value minister of agriculture.Agrium’s directors with its own board destruction,” Wilson said in anominees and has proposed that the presentation in New York to analysts.Calgary-based company spin off its In a statement today, Jana Managingretail business to boost profitability. Partner Barry Rosenstein said AgriumThe New York-based hedge fund is failed to address Jana’s concernsAgrium’s largest shareholder, about “a lack of relevant boardaccording to data compiled by experience and the need for anBloomberg. enhanced shareholder perspective.” Source : Bloomberg Extracted from 6GENEVA PARTNERS – 33 Quai Wilson – 1201 Geneva – Switzerland – Tel. : +41/22 906 95 95 – –
  7. 7. Icahn Domain Pops Up After Herbalife Hedge Fund FightBy Matt Townsend registered more than 10 domain mischaracterized its business.January 30th, 2013 names that reference Ackman, The debate over Herbalife sparked a including “,” public dispute between Ackman and First, hedge fund according to Icahn last week when they sparred ontitans Bill Ackman, Carl Then yesterday the Loeb and Icahn CNBC about the company and pastIcahn and Daniel Loeb tussled publicly domain names popped up. dealings with each other. Icahn laterover whether Herbalife Ltd. (HLF) is a Ackman and Pershing had nothing to said on Bloomberg Television hepyramid scheme. Now their names do with the domain registrations, said didn’t “like” or “respect” Ackman.are popping up online in ominous- a company spokesman. Icahn and Ackman’s shorting of Herbalife wassounding domain names, including Loeb didn’t return calls seeking countered by fellow hedge-fund“” and comment about the latest domain manager Loeb. On Jan. 9, three weeks“” names. after Ackman disclosed his bet againstWhile Herbalife registered several Yesterday Ackman, founder of New Herbalife, Loeb’s Third Point LLCdomain names referencing Ackman York hedge fund Pershing Square disclosed that its hedge funds held 8.9after he accused the nutrition Capital Management LP, took issue million shares of Herbalife at year-company of running a pyramid with the domain names Herbalife end.scheme, it’s unclear who or what registered using his name. Herbalife’s shares have reboundedentity is behind the ones referencing “What legitimate company would do since Ackman first made hisIcahn and Loeb. They were privately something like that,” he said in a comments. They fell 4.1 percent toregistered through and telephone interview. “The spotlight is $37.09 at the close in New York, upcurrently don’t lead to any actual on Herbalife and they are doing from a low of $26.06 after Ackman’swebsites. everything they can do to turn it presentation.Icahn has criticized Ackman for away.” The website HybridDomainer.comshorting more than 20 million Ackman’s Website reported the Icahn and Loeb domainsHerbalife shares, and Loeb’s funds earlier today.disclosed a large position after Ackman has his ownAckman, founder of New York hedge website: Pershing Square Capital This month, Herbalife held an investorManagement LP, went public with his meeting to defend its direct-sellingbet. Earlier this month, Herbalife model and said Ackman had grossly Source : Bloomberg Jana Buys Copart Shares on REIT Conversion Catalyst PotentialBy Kelly Bit for significant value to be unlocked securities such as U.S. governmentJanuary 30th, 2013 were CPRT to convert to a REIT,” Jana notes. said in the letter, referring to the To qualify as a REIT, a company has to Jana Partners LLC, ticker symbol under which Copart invest at least 75 percent of its assetsthe activist hedge fund run by Barry shares trade. “Our research suggests in real estate and obtain 75 percent ofRosenstein, bought shares of Copart that the vast majority of CPRT’s its gross income from rents or interestInc. in a bet the car auction company earnings can be classified as qualifying on mortgages from financingmay convert into a tax- efficient real real estate income.” property, according to the Nationalestate investment trust. REITs, whose primary income streams Association of Real Estate InvestmentShares of Copart, which is based in are from real estate, don’t pay federal Trusts, a Washington-based tradeFairfield, California and helps auto income taxes. In exchange, they’re group.suppliers and insurance companies required by the Internal Revenueprocess and sell salvage vehicles, are Service to distribute at least 90 REIT Ranksattractively priced and may rise percent of their taxable earnings toshould the company convert to a shareholders in the form of dividends. Charles Penner, aREIT, Jana said in a fourth- quarter Excluding mortgage REITs, property partner at Jana, declined to commentletter to investors obtained by trusts have raised record amounts of on the letter. Companies from prisonBloomberg News. cash through equity and debt sales in operators to data centers are“We see an attractive asset trading at the past three years as investors seek expanding the ranks of tax-savinga reasonable price with the potential yields higher than those offered by REITs. Earlier this month, CBS Corp. … 7GENEVA PARTNERS – 33 Quai Wilson – 1201 Geneva – Switzerland – Tel. : +41/22 906 95 95 – –
  8. 8. shares surged the most in more than executive officer, said at a Goldman $300 million to $400 million in grossa year after the company said it will Sachs Group Inc. conference in proceeds. An MLP is publicly tradedconvert its outdoor advertising unit September. and taxed as a partnership.into a REIT and seek a buyer for the “We established our position at anEuropean and Asian parts of that Offshore Drilling attractive cost basis and workedbusiness. throughout November and DecemberOther companies that plan to become Jana also bought to communicate to management theREITs include Corrections Corp. of shares of off-shore drilling contractor optionality and value creation to beAmerica, a Nashville, Tennessee- Noble Corp. on the expectation that captured through the successfulbased prison operator; Equinix Inc., a the Geneva-based company will execution of an MLP growthdata-center operator based in expand its fleet of ultra-deep-water strategy,”Redwood City, California; Ryman rigs, which would contribute to Jana said in the letter. “Much to ourHospitality Properties Inc., based in earnings growth of 60 percent this satisfaction, on January 7th, QEPNashville and formerly known as year and 50 percent in 2014, the firm announced its intention to form anGaylord Entertainment Co.; and said in the letter. MLP and to file regulatory documentsLamar Advertising Co. the Baton Jana said it urged QEP Resources Inc., for an IPO by the second quarter ofRouge, Louisiana-based billboard the Denver-based natural gas and oil 2013.”owner. exploration and production company, Jana Master Fund rose 23 percent lastThe IRS has determined that to form a master-limited partnership, year, the firm said in the letter. Janabillboards are real property, opening a move the company announced Nirvana Fund rose 33 percent in 2012.the door for Lamar to become a REIT, earlier this month. QEP expects to sellSean Reilly, the Baton Rouge, a minority interest in the partnershipLouisiana-based company’s chief in an initial public offering and raise Source : BloombergA C T ICVTI ISVTI SA CATCIT IIVTIYT Y T V % Activist Position Company Name Ticker Position Outstanding % Portfolio Source Date investor Change Shares BILFINGER GBF GR Cevian Capital 6,990,563 56,503 15.19 14.44 Research 01-29-2013 Atlantic ROCKWOOD ROC US Investment 3,800,000 -117,724 4.89 14.50 13D 01-28-2013 Management Southeastern VULCAN MATERIALS VMC US Asset 8,260,292 -3,896,076 6.37 1.43 13G 01-28-2013 Management Icahn CVR REFINING LP CVRR US 4,000,000 4,000,000 2.71 0.75 13D 01-17-2013 Associates Southeastern MELCO INTERNATIONAL 200 HK Asset 192,955,388 -2,991,612 12.59 0.74 Research 01-17-2013 DEVELOPMENT Management Trian Fund TIFFANY & CO TIF US 10,651 -993,500 0.01 0.02 13D/A 01-15-2013 Management Corvex ADT CORP ADT US 11,166,021 10,346,999 4.80 33.24 13D/A 01-10-2013 Management 8GENEVA PARTNERS – 33 Quai Wilson – 1201 Geneva – Switzerland – Tel. : +41/22 906 95 95 – –
  9. 9. This newsletter has been prepared by, and is subject to the copyright of, Geneva Partners S.A. (Geneva Partners).This newsletter is confidential and has been furnished to the intended recipient solely for such recipient’s information and private useand may not be referred to, disclosed, reproduced or redistributed, in whole or in part, to any other person.This newsletter has been prepared on the basis of information provided to Geneva Partners and publicly available information. Thisinformation has not been independently verified by Geneva Partners. This newsletter does not constitute a due diligence review andshould not be construed as such. No representation or warranty as to this newsletters accuracy, completeness or correctness is madeand no reliance should be placed on the accuracy, completeness or correctness thereof. The information contained, and any opinionsexpressed, in this newsletter are subject to change at any time and Geneva Partners is under no obligation to inform the intendedrecipient or any other person of any such change.Geneva Partners accepts no responsibility or liability whatsoever in relation to this newsletter (including for any error or in relation tothe accuracy, completeness or correctness of this newsletter). The exclusion of liability provided herein shall protect Geneva Partners,its officers and employees in all circumstances.This newsletter is not intended to form the basis of any investment decision and does not constitute or form part of any offer to sell oran invitation to subscribe for, hold or purchase any securities or any other investment, and neither this newsletter nor anythingcontained herein shall form the basis of or be relied on in connection with any contract or commitment whatsoever. This newsletter isnot, and should not be treated or relied upon as investment research or a research recommendation under applicable regulatory rules.Geneva Partners is a member of the Swiss Association of Asset Managers (SAAM).Franck berlamont Jean-François Bassignot 9GENEVA PARTNERS – 33 Quai Wilson – 1201 Geneva – Switzerland – Tel. : +41/22 906 95 95 – –