American Capital, Ltd (ACAS): Elliott Associates Reports Derivative Agreements

Paul Singer‘s Elliott Associates has filed a Form 13D on American Capital Ltd. (NASDAQ:ACAS). The filing shows that Mr. Singer’s firm still owns 6.46 million shares of the company, as we reported in January. The filing does however provide an update in relation to some cash settled swaps with respect to over 19 million of the company’s shares that Elliott Associates has entered into an agreement regarding.

Item 6 of the filing was updated to add the following information:

Elliott, itself and through The Liverpool Limited Partnership, a Bermuda limited partnership and a wholly-owned subsidiary of Elliott (“Liverpool”), and Elliott International have entered into notional principal amount derivative agreements (the “Derivative Agreements”) in the form of cash settled swaps with respect to 4,707,354 and 14,340,745 shares of Common Stock of the Issuer, respectively (representing economic exposure comparable to approximately 2.0% and 6.0% of the shares of Common Stock of the Issuer, respectively). Collectively, the Derivative Agreements held by the Reporting Persons represent economic exposure comparable to an interest in approximately 8.0% of the shares of Common Stock. The Derivative Agreements provide Elliott and Elliott International with economic results that are comparable to the economic results of ownership but do not provide them with the power to vote or direct the voting or dispose of or direct the disposition of the shares that are referenced in the Derivative Agreements (such shares, the “Subject Shares”). The Reporting Persons disclaim beneficial ownership in the Subject Shares. The counterparties to the Derivative Agreements are unaffiliated third party financial institutions.

Hedge fund activity in American Capital Ltd. (NASDAQ:ACAS)

At Q4’s end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, an 8% decline from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or had already accumulated large positions).

Of the funds tracked by Insider Monkey, Brian Taylor’s Pine River Capital Management has the largest position in American Capital Ltd. (NASDAQ:ACAS), worth close to $184.9 million, comprising 2.7% of its total 13F portfolio. The second most bullish fund manager is Elliott Management, with a $168.6 million position; the fund has 2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions consist of Anthony Bozza’s Lakewood Capital Management, Andy Redleaf’s Whitebox Advisors, and Fir Tree, founded by Jeffrey Tannenbaum.

Since American Capital Ltd. (NASDAQ:ACAS) has experienced bearish sentiment from hedge fund managers, it’s safe to say that there were a few money managers that decided to sell off their positions entirely in the third quarter. It’s worth mentioning that Emanuel J. Friedman’s EJF Capital dumped the biggest stake of all the hedgies followed by Insider Monkey, totaling about $103.8 million in stock, while Christian Leone’s Luxor Capital Group was right behind this move, as the fund sold off about $56.7 million worth of shares. These bearish behaviors are important to note, as total hedge fund interest was cut by 3 funds in the third quarter.

You can access the original SEC filing by clicking here.

Ownership Summary Table

Name Sole Voting Power Shared Voting Power Sole Dispositive Power Shared Dispositive Power Aggregate Amount Owned Power Percent of Class
Elliott Associates 6,010,500 0 6,010,500 0 6,010,500 2.5%
Elliott International 0 6,464,500 0 6,464,500 6,464,500 2.7%
Elliott International Capital Advisors Inc 0 6,464,500 0 6,464,500 6,464,500 2.7%

Page 1 of 6 SEC Filing

(RULE 13D – 101)
(Amendment No. 4)*
American Capital, Ltd.
(Name of Issuer)
Common Stock, $0.01 par value
(Title of Class of Securities)
02503Y 10 3
(CUSIP Number)
Christopher P. Davis, Esq.
Kleinberg, Kaplan, Wolff & Cohen, P.C.
551 Fifth Avenue, New York, New York 10176
(212) 986-6000
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
February 16, 2016
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ].
Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See Rule 13d-7 for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
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