Hedge Fund News: Edward Lampert, Carl Icahn, D.E. Shaw

Williams Names 3 Directors Amid Fight With Activist Corvex (Reuters)
Pipeline company Williams Cos Inc (WMB.N) added three new directors to its board on Monday as it works to fend off an attempt by activist hedge fund Corvex Management to replace all of the company’s directors. Williams said on Monday it appointed Pioneer Natural Resources Co (PXD.N) CEO Scott Sheffield, PPL Corp (PPL.N) CEO William Spence and former American Midstream Partners (AMID.N) CEO Stephen Bergstrom as directors, effective immediately, increasing the size of its board to 10 directors. Corvex, run by Carl Icahn protege Keith Meister, nominated a slate of 10 directors last week, after assailing the quality of Williams’ current directors.

Virtually No Institutional Investors Are Happy With Activist Hedge Funds Right Now (Bloomberg)
The ongoing squabble between billionaire hedge fund luminaries William Ackman and Carl Icahn over Herbalife Ltd. distracts from a large warning sign for activist managers: they’re failing to live up to the expectations of institutional investors. The August edition of research provider Prequin’s Hedge Fund Spotlight shows that 100 percent of institutional investors surveyed indicated that returns on their activist hedge fund investments had fallen short of their expectations.

Herbalife May Have Misled Investors, SEC On Impact Of FTC Deal, One Short-seller Says (Reuters)
After U.S. multi-level marketing company Herbalife settled a probe of its sales practices with the U.S. Federal Trade Commission last month, top executives assured investors that the company would be able to thrive under the new rules. The consumer protection agency had questioned the company’s sales methods. Billionaire investor William Ackman in 2012 claimed the company was running a pyramid scheme, recruiting members with a promise of payment for enrolling others in distribution, rather than depending on the actual sale of its nutritional supplements and weight management products.

Young Hedge-Fund Manager Cracks The Private-Equity Code: Small Stocks And Leverage (Forbes)
Private equity is a $4 trillion industry based on a monumental misperception. Private-equity executives tout their ability to reap outsized returns by buying troubled companies, turning them around and selling them for multiple times their initial investment. But here’s a tip: You can do the same thing by buying highly leveraged small-cap stocks. It’s not quite that simple – there are no simple ways to make money in the stock market – but private equity isn’t that complicated, either. Dan Rasmussen knows, because as a young Harvard graduate working at Bain Capital he was assigned to a team that analyzed what worked and what didn’t in private equity.