Activists Post Best Month In Two Years

From Cliffwater LLC


Risk assets rallied strongly in February led by developed equity markets. This propelled the HFRI Event Driven Index to its best monthly return since October 2011 at 3.0%.

  • While positive returns were generated across all event driven sub-strategies, activist and equity special situations strategies benefited the most from the equity market rally. Activist managers returned 4.4% on average for the strategy’s best month in two years. Multi-strategy event driven managers lagged the rest of the group as portfolio hedges offset otherwise strong equity and distressed credit performance.
  • While M&A activity is down year-over-year through the first two months of 2015, the environment for corporate activity remains robust. 2015 is already on track to be the second best year for M&A since 2007 (by annualized deal value). February’s high profile transactions included Pfizer’s $15 billion deal to acquire Hospira and Valeant Pharmaceuticals’ $11.6 billion bid for Salix Pharmaceuticals.
  • A number of large activist targets announced corporate changes during the month: Darden, which has been targeted by Starboard Value, announced the appointment of a permanent CEO after Starboard successfully replaced the company’s entire board last year; Juniper Networks, which has been targeted by Elliot Management, announced the appointment of two independent directors supported by Elliott.
  • Outside the US, Third Point disclosed a stake in Japan’s Fanuc and encouraged the company to buy back stock. This marks a return to Japan for the firm following its high profile position in Sony in 2013. Finally, a group of hedge funds including Appaloosa Management, Hayman Capital and Taconic Capital Advisors disclosed stakes in General Motors and urged the company to buy back at least $8 billion of stock and appoint an independent director backed by the managers.

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