Jason Ader is one happy activist at the moment as Bwin.Party Digital Entertainment will be acquired by rival firm 888 Holdings PLC in a $1.4 billion cash and stock deal. Ader, who manages SpringOwl Associates, spearheaded a board shakeup in British gambling firm Bwin last year by first holding a proxy battle with the firm a month before their annual shareholders meeting in May, before finally getting their cooperation in putting a stop to what he called a continuing decline in the business. The billion-dollar acquisition of Bwin marks a win for Gibraltar-based 888 Holdings as well, who fought with Isle of Man-based GVC Holdings for the rights to acquire the firm. The acquisition also marks a triumph for an American activist in Europe, where few American activists have seen much success, The Wall Street Journal notes.
Following activist funds like SpringOwl, an investment vehicle for Jason Ader and Andrew Wallach’s Cumberland Associates, is important because it is a very specific and focused strategy in which the investor doesn’t have to wait for catalysts to realize gains in the holding. A fund like Ader’s can simply create its own catalysts by pushing for them through negotiations with the company’s management and directors. In recent years, the average returns of activists’ hedge funds has been much higher than the returns of an average hedge fund. Furthermore, we believe do-it-yourself investors have an advantage over activist hedge fund investors because they don’t have to pay 2% of their assets and 20% of their gains every year to compensate hedge fund managers. We have found through extensive research that the top small-cap picks of hedge funds are also capable of generating high returns and built a system around this premise. In the 32 months since our small-cap strategy was launched, it has returned over 139% and beaten the S&P 500 ETF (SPY) by 81 percentage points (see more details here).
It also appears that activist funds like SpringOwl may be setting their sights on Europe, as Ader told The Wall Street Journal that he is open to seeking new deals in the region. “I’ll take credit for being the most successful American activist in Europe,” the publication quotes Ader as saying before writing that the activist is “open to trying more”.
All the fighting inside Bwin and the eventual reconciliation started when SpringOwl acquired a 6.1% stake in Bwin for about $100 million in March 2014. Ader said in April last year that he did not want to see “boardroom dysfunction” in the firm. He pushed for four new board seats in Bwin and recommended directors including Michael Fertik, Founder and CEO of Reputation.com, who is a specialist in managing reputations in the connected world.