Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Has Pleasant Lake Partners Made An Offer MagnaChip Semiconductor Corporation (MX) Can’t Refuse?

Page 1 of 2

According to a new 13D filing with the U.S. Securities and Exchange Commission, Jonathan Lennon’s Pleasant Lake Partners disclosed owning 3.42 million shares of MagnaChip Semiconductor Corporation (NYSE:MX), representing 9.9% of the company’s common stock. Hence, this marks an increase of 189,230 shares since the fund disclosed its position in its latest 13F filing, continuing a trend of the hedge fund gradually boosting its stake in the company. However, this relatively minor uplift is not the most important revelation of the filing, as Pleasant Lake Partners also disclosed sending a letter to MagnaChip proposing to acquire all of the outstanding common stock of the company, at a price of $10.00 per share.


Pleasant Lake Partners is an activist hedge fund co-established by Jonathan Lennon in 2012. The New York-based investment firm employs a concentrated approach to investing in global stocks by focusing on consumer, industrial/natural resources, and media companies. Jonathan Lennon had previously worked as a general stock analyst at JAT for three-and-a-half years and as an investment banking analyst at Goldman Sachs prior to establishing his own firm. The 13F filing for the June quarter reveals that Pleasant Lake Partners manages a public equity portfolio worth $118.95 million.

Jonathan Lennon
Jonathan Lennon
Pleasant Lake Partners

Following activist funds like Pleasant Lake Partners 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 Pleasant Lake Partners 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 36 months since our small-cap strategy was launched it has returned 118% and beaten the S&P 500 ETF (SPY) by more than 60 percentage points (read more details).

To begin with, MagnaChip Semiconductor Corporation (NYSE:MX) is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products. The shares of MagnaChip are down by nearly 37% year-to-date, mainly impacted by negative sentiment, business and accounting problems, and geographic complexity. However, the stock has gained over 7% during today’s trading session following the announcement of Pleasant Lake Partners’ intentions to buy the chipmaker. In the meantime, Marc Lasry’s Avenue Capital is among the largest shareholders of MagnaChip, owning nearly 4.09 million shares.

Let’s now go back to the recently-released letter sent by Pleasant Lake Partners to MagnaChip. The activist hedge fund asked the company’s Board of Directors to remove its poison pill strategy, which is generally considered as one of the most effective defense tactics available to publicly-traded corporations. Earlier this year, MagnaChip adopted a shareholder rights plan that was intended “to reduce the likelihood that any person or group would gain control of the company through open market accumulation”. As already mentioned, Pleasant Lake Partners offered to buy all of the shares of MagnaChip, saying that a potential sale of the company would represent the best way to maximize value for its shareholders. The $10-a-share offer represented a 29% premium from the closing price on Friday. The hedge fund believes that MagnaChip would be worth considerably more to some strategic acquirers than as a standalone company. The differential between the recently-made offer and the current price narrowed during today’s trading session, but left a large gap that reflects the uncertainty surrounding the deal.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!