Billionaires Paulson and Icahn Trim Stakes In 2 Companies; Plus Latest News on 2 Proxy Fights

According to a fresh article posted by the Wall Street Journal, the New York City Employees’ Retirement System, the largest public employee pension fund in New York City, plans to start pulling out investments in hedge fund vehicles. “Hedge funds are charging exorbitant fees for high-risk and opaque investments”, said one trustee of the pension fund. This represents yet another sign that the hedge fund industry has failed to impress their clients and investors in recent years, but the industry is still anticipated to revive in the upcoming years due to the slow-growth environment across the globe. Having said that, this article will examine four fresh filings submitted with the SEC by several widely known and successful hedge fund firms, including Paulson & Co. and Icahn Capital LP.

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Canyon Capital Seeks to Replace This Bond Insurer’s Chairman

As revealed by a fresh filing with the SEC, Canyon Capital Advisors LLC, founded by Joshua Friedman and Mitchell Julis, delivered a presentation to proxy advisory firm Institutional Shareholder Services Inc. (ISS) on Wednesday regarding the activist shareholder’s ongoing proxy fight with Ambac Financial Group Inc. (NASDAQ:AMBC). ISS, a widely known proxy advisory firm in North America, researches proxy issues and makes voting recommendations, with its decisions being able to solve proxy fights such as the one between Canyon Capital and Ambac. Specifically, the aforementioned presentation shows that Canyon Capital seeks to replace the U.S. bond insurer’s Chairman of the Board, Jeffrey S. Stein, with their director nominee Frederick Arnold, saying that “Mr. Stein has been a strong supporter of Mr. Tavakoli and his policies and has presided over the Board during the significant decline in Ambac’s stock since Mr. Tavakoli initially was appointed as Ambac’s President and CEO on an interim basis in early 2015”.

Canyon Capital has been pressuring Ambac Financial Group Inc. (NASDAQ:AMBC) to accelerate the settlement of $4 billion in insurance claims and started a proxy fight by nominating three director nominees for election to the Board at the company’s upcoming meeting of shareholders, but recently saluted the appointment of two new directors: Ian Half, a shareholder-proposed nominee, and David Herzog. Nonetheless, the Lost Angeles-based hedge fund said that “While these new directors are a welcome addition, Canyon Capital is skeptical that true change will be possible as long as the board contains only one director affirmatively proposed by stockholders and continues to be chaired by Mr. Stein”, so Canyon continues its attempts to replace the current Chairman with Mr. Arnold.

Canyon Capital owns approximately 2.2 million shares of the bond insurer, aggregately valued at $35.75 million, whereas the hedge fund’s credit exposure, including deferred payments, reaches $376 million. That’s the main reason why Ambac Financial said in recent public statements that “Canyon has as its singular objective the accelerated payment of Canyon’s credit claims, not the best interests of Ambac’s shareholders”. Going back to the aforementioned presentation, the activist shareholder says that “Ambac’s realizable value if properly managed can reach as much as $40 per share”, suggesting that Mr. Arnold could help Ambac reach that possible milestone. The shares of the bond insurer are 15% in the green year-to-date. William C. Martin’s Raging Capital Management reported owning 1.59 million shares of Ambac Financial Group Inc. (NASDAQ:AMBC) through the round of 13Fs for the December quarter.

Let’s head to the next pages of this article, where we will discuss three other filings with the SEC.

Harvest Capital Disappointed with Green Dot’s Decision to Add Three New Directors to Board

In fresh filing with the SEC, Joseph A. Jolson’s Harvest Capital Strategies LLC revealed a freshly-issued statement that discusses Green Dot Corporation (NYSE:GDOT)’s appointment of three new directors and the expansion of the company’s Board. In a separate proxy statement filed with the SEC earlier this week, Harvest Capital, which currently owns 4.60 million shares of the provider of reloadable prepaid debit card (9.2% of the company’s outstanding common stock), urged Green Dot’s shareholders to vote for the election of its three nominees to the Board at the company’s upcoming annual meeting of shareholders.

However, the company announced on Monday the appointment of three new independent directors to the Board and the increase of the size of the Board to ten seats from eight seats, as one non-independent director stepped down. In the aforementioned statement, Mr. Jolson’s Harvest Capital voiced their discontent with the company’s decision to appoint the three directors without a shareholder vote amid an ongoing proxy contest. Moreover, the San Francisco-based investment firm said that the increase in the Board size will most likely diminish the influence of Harvest-nominated directors should they be elected by shareholders at the company’s annual meeting of shareholders that is set to take place in roughly six weeks. In previous statements and SEC filings, Harvest Capital Strategies claimed that Green Dot Corporation (NYSE:GDOT) could nearly double its earnings per share within three years as long as the company implements a set of “self-help” initiatives proposed by the hedge fund. San Francisco-based Harvest says that the appointment of three “unelected” directors and the increase in the Board size “appears to be nothing more than a thinly-veiled attempt by Green Dot to entrench management and the Board, while protecting the status quo”, but “shareholders will have an opportunity to express their dissatisfaction at the 2016 Annual Meeting”. Shares of Green Dot have gained 32% since the beginning of 2016, with the San Francisco-based investment firm serving as a strong catalyst. A total of 12 hedge funds from our system were invested in the company at the end of the December quarter, accumulating 11% of outstanding common stock. Ken Griffin’s Citadel Advisors LLC owns 1.46 million shares of Green Dot Corporation (NYSE:GDOT) as of December 31.

Billionaire John Paulson Cuts Stake in NovaGold Resources

According to a Form 4 filing with the SEC, John Paulson’s Paulson & Co. unloaded 1.13 million shares of NovaGold Resources Inc. (USA) (NYSEMKT:NG) on Monday at an average price of $6.15 per share, cutting its ownership to 31.82 million shares. The freshly-trimmed stake accounts for 9.95% of the company’s total number of outstanding shares. The billionaire Paulson’s hedge fund sold an additional 2.56 million shares last week at an average price of $5.41 per share.

NovaGold operates in the mining industry and focuses on the exploration and development of gold and copper mineral properties. However, investors should note that the company has no operations just yet, with its primary assets involving a 50% interest in the Donlin Gold project in Alaska and a 50% interest in the Galore Creek project in Canada. The Donlin Gold project is owned and operated by limited liability company Donlin Gold LLC, in which Barrick Gold Corporation (USA) (NYSE:ABX) and NovaGold each own a 50% interest. NovaGold’s share of capital spending associated with this project is expected to reach $9 million for 2016. Much of this capital will be channeled into advancing the permitting process, as various federal and state government permits and approvals need to be received before the Donlin Gold project can start construction, and support the Environmental Impact Statement (EIS) process. NovaGold Resources Inc. (USA) (NYSEMKT:NG) has seen its market value gain 40% since the beginning of 2016, which shows that the company’s projects keep moving forward. There were 15 money managers tracked by Insider Monkey with long positions in NovaGold on December 31, who hoarded up nearly 23% of the company’s shares. Seth Klarman’s Baupost Group was the owner of 18.98 million shares of NovaGold Resources Inc. (USA) (NYSEMKT:NG) at the end of 2015.

Highly-successful Activist Investor Takes Profits off the Table from Hologic Investment

As revealed by a newly-amended 13D filing, Carl Icahn’s Icahn Capital LP currently owns 10.23 million shares of Hologic Inc. (NASDAQ:HOLX), which constitute 3.61% of the company’s outstanding shares. This represents a decrease from the stake of 15.82 million shares disclosed in the activist fund’s previous 13D filing on the company, submitted with the SEC on April 4.

Hologic is a manufacturer and supplier of diagnostics products, medical imaging systems and surgical products. The company conducts its business operations through four main segments: Diagnostics, Breast Health, GYN Surgical, and Skeletal Health. Hologic Inc. (NASDAQ:HOLX)’s product revenues for first quarter of fiscal 2016 that ended December 26 reached $587.2 million, up from $546.6 million reported for the first quarter of fiscal 2015. Product revenues generated from the Diagnostics segment, which accounted for roughly 52% of total product revenues for the quarter, increased by 2.4% year-on-year, the slowest growth rate among the four segments. Breast Health revenues, which represented 29% of product revenues, grew 11.6% year-on-year, while GYN Surgical product revenues (17%) and Skeletal Health product revenues (3%) increased by 17.1% and 9.1%, respectively. Going back to Mr. Icahn’s involvement with Hologic, Icahn Capital acquired a double-digit stake in the medical product company in late 2013 and then managed to get two seats on the company’s Board for two Icahn designees. Moreover, the feared activist investor forced the appointment of Stephen P. MacMillan as Chief Executive Officer in December 2013 to replace former CEO, Jack W. Cumming. Carl Icahn said at the beginning of 2016 that Hologic serves as “the quintessential example of activism at its best”, and thanked Mr. MacMillan for “a job well done”. A total of 33 “hedgies” from our database had stakes in the medical-equipment maker at the end of December, stockpiling nearly 16% of the company’s outstanding shares. Jim Simons’ Renaissance Technologies acquired a 1.67 million-share stake in Hologic Inc. (NASDAQ:HOLX) during the October-to-December period.

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