Luxor Capital Group Increases Exposure to RCS Capital Group (RCAP) Despite Pending Lawsuit

Christian Leone’s Luxor Capital Group increased its stake in RCS Capital Corp (NYSE:RCAP) by more than 2.1 million Class A Common Shares according to its latest 13D filing. It is the third time the firm alters its position in the company this quarter, after its initial purchase of around 31,110,103 shares in October. Following its latest transaction, Luxor Capital Group now owns around 25.85 million shares of RCS Capital, representing 24.9% of the company’s outstanding stock.

Luxor Capital Group is a New York-based hedge fund with a highly diversified equity portfolio, valued at around $6.6 billion. The firm has successfully implemented a value-based strategy and boasts a balanced structure, which manager Christian Leone can be proud of. Apart from investing in equities and fixed incomes, the hedge fund is always on the look-out for opportunistic investments, such as those presented by distressed companies with underlying potential. In fact, the firm has made a habit of investing in these equities, as well as in special situations, and global debt. The recent acquisition of RCS Capital Corp (NYSE:RCAP) stock seems to fit the hedge fund’s profile, especially considering the uncertainties surrounding the company’s future. Due to his involvement in an accounting scandal at American Capital Realty Properties Inc (NASDAQ:ARCP), Nick Schorsch resigned as chairman of RCS Capital. In addition, a class action lawsuit was filed against the company, suggesting further uncertainties are yet to follow. Nevertheless, whether Luxor Capital Group anticipated this situation and is looking for a way to profit from it remains unclear and doubtful at best.

Christian Leone

RCS Capital Corp (NYSE:RCAP) is a wholesale broker-dealer, and investment banking firm headquartered in New York. Through its subsidiaries, the company engages in the wholesale distribution, capital markets, and transaction management services businesses. In addition, the $815 million market cap entity is renowned for providing strategic advisory services, including advising sponsors in the structuring and development of new investment programs and registered investment funds. Furthermore, RCS Capital specializes in offering retail business advice, thus serving as an alternative to captive investment advisors and other broker-dealers. In 2013, RCS Capital altered its name, only a year after the company previously known as 405 Holding Corporation was incorporated.

Following its latest acquisition of Class A Common Stock, Luxor Capital Group continues to be RCS Capital Corp (NYSE:RCAP)’s largest institutional shareholder. However, other investment firms are also betting on the company, such as Brian Jackelow’s Sab Capital Management, which holds more than 3.05 million shares. Despite shedding more than half of their shares last quarter, Rob Butts and Josh Clark’s Southpoint Capital Advisors also remain bullish regarding RCS Capital, with a stake of 2 million shares.

Disclosure: Pablo Erbar holds no positions in any stocks or funds mentioned.