T O P A C T I V I S T S TO R I E S

A REVIEW OF FINANCIAL ACTIVISM BY GENEVA

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January 18th,2013

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Boom year for activist investors
Investment funds that seek to profit by pushing for strategy shifts at companies or improvements in corporate governance have had a banner year, posting returns well ahead of the US equity market and their stock trading peers. []

Icahns Stake Pushes Transocean Closer to Partnership

Carl Icahns new stake in Transocean Ltd. (RIG) may raise pressure on the worlds largest offshore driller to put some of its rigs into a tax-advantaged partnership as the billionaire seeks to boost his investments value. []

Banks Need Activists More Than New Rules, Mayo Says

Wall Street banks such as Morgan Stanley will benefit more from shareholders demanding reforms than regulators imposing new rules, CLSA Ltd.s Mike Mayo said.[]

Activist investors toast a banner year

Is any company safe from the agitators? Even Institutional Shareholder Services, an influential adviser on corporate governance matters, which is often an ally of activist investors, now has one of them in its own shareholder register.[]

Fund titans Loeb, Ackman square off on Herbalife

Two prominent hedge fund managers are squaring off over Herbalife Ltd, with Daniel Loeb betting the nutritional supplements company will flourish while William Ackman is betting it will falter.[]

Activist Funds Loaded With Capital Augurs Dealmaking Surge

We have seen a dramatic increase in the level of shareholder activism, said Patrick Ramsey, co-head of Americas M&A at Bank of America Corp., who predicts that activism will contribute to an increase in M&A this year.[]

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T O P A C T I V I S T S TO R I E S
A REVIEW OF FINANCIAL ACTIVISM BY GENEVA

PARTNERS

January 18th,2013

Boom year for activist investors

By Dan McCrum and Sam Jones December 23th, 2012
Investment funds that seek to profit by pushing for strategy shifts at companies or improvements in corporate governance have had a banner year, posting returns well ahead of the US equity market and their stock trading peers. The growing status and firepower for activist investors points to more boardroom battles ahead for 2013, as big pension funds throw money and support behind the agitators. Leading the pack in terms of performance this year are The Childrens Investment Fund, Corvex and Marcato Capital Management, with returns of around 25 per cent as of the end of November, according to investors. For TCI, winning bets included Japan Tobacco, Disney and News Corp, the media company which decided to spin out its print media businesses this year in the wake of the UK phone hacking scandal. Marcato and Corvex both had success

at the Corrections Corporation of America, where they are attempting to persuade the prison operator to convert into a real estate investment trust. Pressure from Corvex also helped push Ralcorp to sell itself to to Conagra last month. Both hedge funds are run by disciples of more established activists. The $900m Marcato was started by Mick McGuire after he left Pershing Square, the $11bn fund run by Bill Ackman. The $6bn Corvex is run by Keith Meister, a former lieutenant to corporate raider Carl Icahn. Other strong performers include Jana, the $2bn flagship fund run by Barry Rosenstein is up 21 per cent this year, which has persuaded several companies to split apart this year, and Cevian, the $7bn European activist fund up almost 21 per cent at the end of November according to investors. The small, focused portfolios of activists can be susceptible to periods of underperformance, and three of the more established firms have trailed this year. It has been a mixed year for Relational Investors, run by Ralph Whitworth.

The firms small- and mid-cap strategy, with almost $2bn under management, had returned over 26 per cent this year, according to investors. However the large-cap strategy, with twice the capital, is up only 6.9 per cent, hit by declines in the value of computer maker Hewlett Packard, where Mr Whitworth is on the board. Bill Ackmans Pershing Square, was up only 6 per cent at the end of November, investors said. However, they said it was likely to have had a strong December as Mr Ackman unveiled a high-profile position betting on a fall in the share price in Herbalife, the nutritional supplement direct. Shares in the company fell nearly 38 per cent last week following Mr Ackmans attack. The hedge fund of Trian Partners, run by Nelson Peltz, Edward Garden and Peter May, was up 4 per cent for the year at the end of November, according to investors. All the firms declined to comment.

Source : Financial Times

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Icahns Stake Pushes Transocean Closer to Partnership

By David Wethe January 16th, 2013 Carl Icahns new stake in Transocean Ltd. (RIG) may raise pressure on the worlds largest offshore driller to put some of its rigs into a tax-advantaged partnership as the billionaire seeks to boost his investments value. Transoceans announcement this week that Icahn bought 1.56 percent of its shares and sought regulators permission to own more than 3 percent stirred a debate in the investment community as the activist investor known for shaking up companies remained silent about his intentions. Hes jumping in less than two weeks after Transocean agreed to pay the U.S. $1.4 billion to settle its liability in the 2010 Gulf of Mexico oil spill. With the company already in turnaround mode -- the shares have led peers with a 34 percent gain over the past year -- some investors and analysts said they expect the 76year-old to push for Transocean to create a master limited partnership, or MLP, to raise cash for the parent company and spur growth with its tax-free structure. It would be the second drilling-rig partnership after Stavanger, Norway-based Seadrill Ltd. (SDRL) spun off assets to create Seadrill Partners LLC (SDLP) in October.I would guess hes going after an MLP because there arent a whole lot of other levers to pull, Joe Hill, an analyst at Tudor Pickering Holt & Co. in Houston said in a telephone interview. Icahn didnt return repeated calls and e-mails to his office requesting comment on his investment in Vernier, Switzerlandbased Transocean. MLP Considered Transocean said it was studying the possibility of forming an MLP when asked about it after Seadrills spinoff. Its certainly interesting, Greg Cauthen, the companys former interim chief financial officer, told analysts and investors Nov. 6. Its something we have and will continue to look at, but weve not come to any conclusions at this time. Cauthen was succeeded a week later by Esa Ikaeheimonen, previously the chief financial officer at Seadrill, a move that was announced in September. Transocean isnt saying much about the Icahn investment, other than an e-mailed statement Jan. 14 that it looks forward to talking with him. Icahn notified the company that hes seeking regulatory approval to potentially acquire shares worth more than $682.1 million, Transocean said in a statement on its website the day before. [] Creditors Concern The move by an activist investor known for pushing companies for change added enough uncertainty to concern creditors, with Transocean bonds reversing gains posted after its oil spill settlement was announced Jan. 3. The companys $1 billion of 6.8 percent notes due March 2038 fell 2 cents to 121 cents on the dollar, yielding 5.27 percent at 4:31 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The rig contractor has made progress in shoring up its balance sheet after losing more than half its market value following the April 2010 oil spill, Collin Gerry, an analyst at Raymond James said in a telephone interview. Earnings before interest, tax, depreciation and amortization are expected to almost double in 2012 to $3.39 billion from $1.85 billion a year earlier, according to 39 analysts estimates compiled by Bloomberg. The Ebitda is expected to climb another 39 percent over the next two years, and for the first time since 2008, the company is expected to increase revenue in 2012 to $9.7 billion. Transocean also is improving its fleet, having sold most of its standardized shallow-water drilling rigs for $1.05 billion, and started building nine new rigs, most of which should be able to command some of the highest day rates in the industry and work in waters as deep as 12,000 feet. Macondo Settlement The settlement with the U.S. Justice Department over Transoceans role in the explosion of the Macondo well and subsequent oil spill calls for the company to pay $1.4 billion over five years, a payment schedule that Argus Research analyst Phil Weiss said in a Jan. 9 note to investors was certainly manageable. After turning in the best performance among peers on the Philadelphia Oil Service Sector Index (OSX) over the past year, the company still has room to grow. The stock is trading at about 85 percent of the companys net-asset value, compared with the 10- year average of more than 100 percent for the industry group, West said. Its extremely undervalued, which is a classic Icahn trade, said Laurence Balter, who helps manage $100 million, including Transocean shares, at Oracle Investment Research in Fox Island, Washington. CVR Partnership CVR Energy Inc. (CVI), an oil refiner Icahn took control of last year after winning a proxy fight with management, is scheduled to hold a $520 million initial public offering today to create an MLP with the companys two oil refineries. Icahn is poised to double his $2 billion investment in CVR thanks to the restructuring and cheaper U.S. oil that has widened profit margins for refiners.[] MLPs pay no U.S. corporate income tax and distribute cash to holders of partnership units,.

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which are traded like shares in a public corporation. MLPs are usually controlled by a general partner that retains a share of the units and receives a portion of the income. Retail investors have favored the MLP model in the pipeline industry because they tend to pay steady dividends tied to long-term contracts that are often akin to rent. MLP Expansion In the past year, more oil and natural gas producers and refiners have been attracted to the model. Now, with most major rig owners mulling the idea, Scott Gruber, an analyst at Sanford Bernstein dubbed the topic MLP Mania? in a note just after Seadrill announced the IPO of Seadrill Partners. MLPs dont create value for foreigndomiciled drilling companies such as Transocean and Seadrill because theres no tax-efficiency gain, Gruber said in a telephone interview. Thats why Seadrill ultimately went with a limited- partnership structure instead of an MLP, he said. The reason why

Seadrill Partners trades at a premium is because of its payout to unitholders. That same effect could be accomplished at Transocean by bringing back the dividend, he said. Seadrill gave its partnership a partial interest in four drilling rigs with longterm contracts operating in North America and West Africa. Since it began trading Oct. 18, the parent company has fallen 10 percent while Seadrill Partners has climbed 26 percent. Transocean is viewed as under-valued compared to Seadrill at the time of its spinoff, James West, an analyst at Barclays Capital said in a telephone interview. So shares may gain with the cash from an MLPs unit distributions and improved forecasting for cash-flow from longterm rig contracts, he said. Still, the arguments for a Transocean MLP are less convincing, according to Tudor Pickerings Hill. Value Questions Its fine to do one

as an experiment, but Im a little skeptical theyre going to get a big value uplift from doing one, Hill said. Balter sees an MLP structure as a quick boost to shares of the parent company in the beginning, though ultimately a cop out because the structure may take away some of the best assets from the larger company, he said. I would not be surprised to see them go the MLP route, Balter said. But I would be disappointed that the industry is trending this way, just for the sake of raising the share price. Alternatively, Icahn may just focus on pushing the company to cut costs, reduce debt, sell older vessels and reinstitute the dividend, Gruber said. A year ago, you could see some incremental pockets of value in squeezing some stuff out, but now some of those have been resolved and youre left wondering, Whats left for him to really change? Gerry said. Maybe its the MLP structure.

Source : Bloomberg

Banks Need Activists More Than New Rules, Mayo Says

Wall Street banks such as Morgan Stanley will benefit more from shareholders demanding reforms than regulators imposing new rules, CLSA Ltd.s Mike Mayo said. Activist investors including Nelson Peltzs Trian Fund Management LP and Dan Loebs Third Point LLC will have more success in changing the biggest U.S. banks by holding managements feet to the fire, Mayo said today in a Bloomberg Television interview with Betty Liu. Loebs hedge fund said yesterday it bought a stake in Morgan Stanley, and predicted the New York-based banks shares may double as brokerage margins improve and management devises a bold fix for the fixed-income trading business. State Street Corp. (STT), the third-largest custody bank, came under pressure from Peltz in October 2011 to increase profitability, cut expenses and put shareholder returns ahead of acquisitions. We need more Dan Loebs than we need regulators, Mayo said. We need more shareholders to step up to the plate. Morgan Stanley (MS) should upgrade its directors, with one member of the banks board familiar to us from previous corporate governance battles we have fought against moribund boards, Loeb wrote in a letter to investors. He previously pushed for an overhaul at Yahoo! Inc. and won the ouster of Chairman Roy Bostock, who is a Morgan Stanley director. Morgan Stanley also needs to improve its fixed-income, currency and commodities business this year, Third Point said. Loeb Fan If we had more investors like Dan Loeb, we likely would have had fewer of the problems of the financial crisis, Mayo said in a telephone interview. This is a seminal event, he said. To have this sort of highprofile activism at a brokerage firm has been unheard-of in recent years. Morgan Stanley plans to reduce some risk-weighted assets, and Chief Executive Officer James Gorman is cutting 1,600 jobs from investment banking, trading and support staff, a person with direct knowledge of the plans said yesterday. Billionaire Peltz disclosed a 5.1 percent stake in Lazard Ltd. (LAZ), the biggest independent advisory firm, in June last year. Peltz criticized the Hamilton, Bermuda-based companys pay and cost structure in meetings with senior executives before the disclosure, people familiar with the matter said at the time. []

Source : Bloomberg

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Activist investors toast a banner year

By Dan McCrum and David Gelles December 23th, 2012 Is any company safe from the agitators? Even Institutional Shareholder Services, an influential adviser on corporate governance matters, which is often an ally of activist investors, now has one of them in its own shareholder register. ValueAct Capital, an activist hedge fund, last month disclosed a 5 per cent stake in MSCI, which owns ISS. The move was only one element in a late flurry of activism that caps a year in which activists have ousted boards, forced corporate break-ups and challenged sleepy management teams. Though the number of 13D filings, which announce when activists have acquired more than 5 per cent of a stock, is down from previous years, boards of directors and bankers still see 2012 as a banner year for activism. Many activists succeeded in pressing companies to return cash or do a deal, and some of the biggest brand names in the US, including Netflix and Procter & Gamble, came under siege. And with several activist funds producing investor returns of more than 20 per cent for the year, cash has flooded into the sector. More money means a need to find more targets, and larger ones, says Henry Gosebruch, managing director in JPMorgans mergers and acquisitions team. There was $57bn dedicated to activist strategies at the end of the third quarter, according to HFR, the research house, up from $51bn at the start of the year and $32bn at the end of 2008. The pressure on boardrooms seems likely to increase. Chris Young, head of contested situations for Credit Suisse, says: There is a tremendous amount of interest from executive suites about vulnerability to activism and shareholder pressure, particularly in the US but also outside the US. It comes as activists are setting their sights high, and looking overseas. Bill Ackman, founder of activist hedge fund Pershing Square, swept a boardroom election at railroad company Canadian Pacific and then moved on to the worlds largest consumer goods maker, P&G. Trian, an activist company founded by Nelson Peltz, Edward Garden and Peter May, has began a low-key campaign to encourage the leadership of Danone, the French yoghurt maker, into increasing profit margins and not wasting capital on costly takeovers. Not everything is going the activists way, however. While Ralph Whitworth of Relational Investors had a good year at Illinois Tool Works, he suffered in Hewlett-Packard. The investor was invited on to the board in November 2011: too late to influence the $10.3bn takeover of UK software maker Autonomy that has since proved disastrous. A person familiar with Relation said that he had experienced very long turnrounds before, including four years at Home Depot. Meanwhile JC Penney, the department store chain, is undergoing a strategic overhaul at the urging of Mr Ackman. Sales have plunged this year, taking the share price with it, but the investor likens it to a private equity style turnround that will ultimately bear fruit. Nonetheless, the fact that such activists are even in a position where they are welcomed on to boards reflects their change in stature and influence. A decade ago, lawsuits were the first response. Today we get an entirely different reaction, we dont get sued any more, says Barry Rosenstein of Jana Partners. Longonly investors will actually call us with suggestions. Some are very publicly onside, such as the Ontario Teachers Pension Plan, a Canadian pension fund that worked with Jana to push for a spin out of the education business from McGraw-Hill, concluded last month. Success begets success, says Daniel Kerstein, head of the strategic finance group at Barclays. The more we see activists appearing to create changes at companies and, through that, profiting for their investors, the more campaigns well see. Its selfperpetuating. The next wave of activist fights is already shaping up ahead of the spring proxy season, when many public companies hold annual meetings where activists can wage public battles for board seats. For instance, after forcing splits at Marathon Petroleum and El Paso, a natural gas company, Jana has taken its playbook to Agrium, a Canadian fertiliser group. Agrium is resisting a split, so investors will vote on a new slate of candidates for the board proposed by Jana, one of which includes Lyle Vanclief, a former Canadian minister of agriculture. More activist situations are being resolved without going to proxy fights. But many of those that do turn into battles are still being waged by Carl Icahn, the billionaire raider turned activist who this month lost his second attempt to gain control of Oshkosh, the defence manufacturer. Mr Icahn says he expects to stay busy: One problem with the economy is that way too may companies are just badly managed and too many boards do not hold management accountable. Company directors, consider yourselves warned.

Source : Financial Times

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Fund titans Loeb, Ackman square off on Herbalife

By Svea Herbst-Bayliss January 9th, 2013 Two prominent hedge fund managers are squaring off over Herbalife Ltd, with Daniel Loeb betting the nutritional supplements company will flourish while William Ackman is betting it will falter. Loeb, fresh off a stellar 2012, gave the supplements company a shot in the arm, when his Third Point LLC hedge fund said it had taken a stake of more than 8 percent in Herbalife. The company's shares rose more than 4 percent. Loeb told investors that he expects the company's share price to do even better, forecasting it can trade between $55 and $68 a share, maybe higher. Given the potential upside makes "the company a compelling long investment for Third Point," Loeb wrote in a letter obtained by Reuters. Also on Wednesday, the Wall Street Journal reported that the U.S. Securities and Exchange Commission opened an inquiry into Herbalife, led by enforcement officials at the SEC's New York office. An SEC spokeswoman declined to comment and Herbalife did not return calls seeking comment.[] The move was announced one day before Herbalife, a 32-year old company which sells nutrition and weight management products through a network of independent distributors who are also paid for recruiting other sellers, scheduled its investor conference. Ackman, who is traveling abroad, plans to listen in by telephone. And it comes less than a month after Ackman's Pershing Square Capital Management called Herbalife's business model a "pyramid scheme" and disclosed a short position valued at around $1 billion, betting that the share price will fall. In a three-hour long presentation Ackman, one of his top lawyers and a top analyst said they believe Herbalife is a "pyramid scheme" because distributors earn more than 10 times as much from recruitment as they do by selling company products. Herbalife has vehemently disputed Ackman's accusations. Loeb and Ackman are sometimefriends, each with reputations for conducting strong research and delivering sharp-tongued bluster. As they now face off, investors and industry observers are bracing for a high-profile and public brawl. "This will be a battle of firepower," said David Tawil, who runs hedge fund Maglan Capital. Herbalife shares bounced around on Wednesday, jumping as much as 8.9 percent on news of Loeb's move before tumbling 5.4 percent on a report that the Securities and Exchange Commission is investigating the company before recovering again to trade up 4 percent at $39.85. Ackman's announcement of his short position last month, which was roughly a year in the making, pushed the share price down 21 percent in two days. It also helped rescue his fund's otherwise tepid returns, leaving investors with a gain of 12 percent for 2012, twice as much as the average hedge fund. On Wednesday, Ackman, who already vowed to donate any profits he made off the investment to charity, tried to take a more modest tone by saying his research was simply designed to help others understand Herbalife better. "The outcome of this investment is not about Pershing Square or anyone else who is long or short the stock," Ackman said in a statement. "To the extent another investor, long or short, brings additional sunlight to the situation, we welcome them." Meanwhile Loeb, who delivered even stronger returns than Ackman with a 21 percent gain in his Third Point Offshore fund and a 33.6 percent rise in his Third Point Ultra fund, is betting that Herbalife stock will rise. "The stock declined by nearly half last month following controversial assertions made by a short seller about Herbalife's business model and practices," Loeb wrote, adding "Third Point has a different view and holds about 8 percent of Herbalife outstanding common stock, which we acquired mostly during the panicked selling that followed the short seller's dramatic claims." The short seller is Ackman whom he does not identify. As a fast-growing company, Herbalife is already a mainstay in many investment firms' index funds. Also, East Side Capital, a highly respected New York-based hedge fund which has long managed money for George Soros, is another very large investor in Herbalife, regulatory filings show. Robert Chapman, who founded Chapman Capital, said last week in a blog post that he took a "monster" bet that Herbalife shares will climb, arguing that Ackman's quest to see Herbalife's stock price go to zero depends heavily on the Federal Trade Commission's becoming involved in the matter. The agency has defined a pyramid scheme as one where a company "promises consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public." Ackman is not alone in his quest. A person familiar with hedge fund Kynikos Associates said short seller Jim Chanos is believed to have been shorting Herbalife shares for a while.

Source : Reuters

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Activist Funds Loaded With Capital Augurs Dealmaking Surge

By David Welch and Serena Saitto January 17th, 2013
Food producer Ralcorp Holdings Inc. refused to accept a takeover bid from rival ConAgra Foods Inc. in 2011. A year later, 39-year-old activist investor Keith Meister stepped in. On Aug. 23 Meister, a onetime Carl Icahn protege, disclosed that he had accumulated a 5.1 percent stake in St. Louis-based Ralcorp, hoping to restart talks with ConAgra. Just three months later Ralcorp, now headed by a new chairman and with Meister on the board, agreed to ConAgras $5 billion bid. Ralcorp Chief Executive Officer Kevin Hunt said the deal provided compelling cash value to shareholders. Meisters activist fund Corvex Management LP turned a quick $90 million on its $189 million investment, or 48 percent, according to Bloomberg calculations based on company filings. The win underscored how activists are shaking loose deals and making big returns, auguring a rise in mergers and acquisitions this year. Meister declined to comment. We have seen a dramatic increase in the level of shareholder activism, said Patrick Ramsey, co-head of Americas M&A at Bank of America Corp., who predicts that activism will contribute to an increase in M&A this year. With financing cheap and share prices sluggish, shareholder activists last year started 219 campaigns against companies they deemed undervalued, a 22 percent increase from 2011 and the most since 2008, according to data from Norwalk, Connecticut-based Factset Research Systems. More Activism More investor dollars has meant more activism. Facing few high-yield alternatives, investors including institutional funds

poured about $3.8 billion into activist funds after returns in 2012, compared with $1.8 billion in 2010, according to Hedge Fund Research, a Chicagobased firm. We wanted to consider all options due to the low return environment, said Aeisha Mastagni, an investment officer for the California State Teachers Retirement System. It has a $3 billion portfolio of activist investments among its total of $154.3 billion under management. The California Public Employees Retirement System is putting $1.25 billion over the next five years into a fund of its own, said senior portfolio manager Anne Simpson. Investors have been rewarded. While the Standard & Poors 500 Index rose 13 percent in 2012, activist funds jumped 25 percent, according to Mazin Jadallah, CEO of San Franciscobased money management firm AlphaClone, which tracks activist funds. M&A could use a boost from the activists. Dealmaking declined 10 percent globally in 2012 to $2.19 trillion, buoyed only by a strong fourth quarter, according to data compiled by Bloomberg.

successful, billionaire activist Carl Icahn said in a phone interview. The wake of the financial crisis has left a substantial price gap between sellers and buyers, said Gideon King, CEO of Loeb Capital Management, a New York-based hedge fund. Thats one of the reasons why you see a return of activists who can push the parties to the bargaining table to try to narrow this chasm.
Technology Deals Mature technology companies laden with cash are an especially ripe target, said Gene Sykes, Goldman Sachs Group Inc.s global head of mergers and acquisitions. Agitation by hedge-fund manager Elliott Management Corp. has put BMC Software Inc. on the block, and it might be taken private this year, according to three people familiar with the situation. Last year it attracted interest from private equity firms including KKR & Co., TPG Capital and Bain Capital LLC, people familiar with the situation said Oct. 22. Elliott, which owns 8.1 percent of Houstonbased BMC, will push again this year for a sale of the software maker, said one of the people, who asked not to be identified because the situation is private. Mark Stouse, a spokesman for BMC, and Peter Truell, a spokesman for Elliott, declined to comment. ValueActs Moves Activist Jeffrey Ubben, co-founder of ValueAct, moved against industrial equipment maker Gardner Denver Inc. after it fired its CEO last July. The fund bought a 5 percent stake for $64.5 million and demanded the board sell the company, citing the lack of strong management. The Wayne, Pennsylvania-based company is talking with several private-equity firms, following the collapse of a deal with SPX Corp. in December. .

Hedge Fund Involvement Activist investors, mostly hedge fund managers, were dubbed corporate raiders amid the hostile takeovers of the 1980s. They tend to buy at least 5 percent of a companys stock and flag their status by disclosing their holding in a 13D filing with the Securities and Exchange Commission. While many hedge funds try their hand at activist investing, only a few focus on it as their core strategy, including Icahn, Starboard Value LP, Dan Loebs Third Point LLC and ValueAct Capital Partners LP. Substantial amounts of money can be made through activism, but you have to have a large amount of longterm committed capital to be

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Loebs Third Point and Bill Ackmans Pershing Square Capital Management LP are now jousting over Herbalife Ltd., a high-profile battle that may put the vitamin distributor in play for a takeover even though its not a traditional activist fight. Calling the company a pyramid scheme, Ackman has shorted the stock while Loeb has bought an 8.2 percent stake, betting that Ackman is wrong -- as the Grand Cayman-based company has said. The agitation could push Herbalife into the hands of a private-equity firm, said Robert Chapman, founder of hedge fund Chapman Capital Partners. His fund placed a monster long bet on the company, he wrote in a letter rejecting Ackmans pyramid

argument. Herbalife LBO?

There is far more likelihood of another LBO of Herbalife than any other headline risk, he wrote. Loeb moved in a traditional activist way on Jan. 9 when he bought a stake in Morgan Stanley and urged the bank to address its fixed-income unit and make board changes. He previously pushed for an overhaul at Yahoo! Inc. and won the ouster of Chairman Roy Bostock. Some of the activists are claiming too much credit when they buy in to companies that are already ripe to be

sold, said Andrew Bednar, a partner at New York advisory firm Perella Weinberg Partners, which defends companies against shareholder campaigns. There is often not a cause and effect between activist action and management decisions, Bednar said. Ralph Whitworth, co-founder of activist fund Relational Investors LLC, responded: Its true that management has often heard similar suggestions from bankers, investors or analysts, but an amazing number suffer from the ready, aim, aim, aim syndrome.

Source : Bloomberg

T A C T ICVTI ISVTI SA CATCIT IIVTIYT Y V

% Outstanding Shares
1.62

Company Name

Ticker

Activist investor
Icahn Associates Corp. Relational Investors LLC

Position

Position Change

% Portfolio

Source

Date

TRANSOCEAN

RIGN VX

5,838,386

5,838,386

1.95

News

01-142013 01-142013

17,847,255

8.88

13D/A

PMCS SIERRA

PMCS US PMC gave Relational an option to appoint a director to the board after 8-1-2013, and Relational agreed not to certain standstill provisions lasting through the duration of the 1.5 year agreement. Relational said that it had "confidence in management's ability to execute on its stated strategy."

MOODYS

MCO US

ValueAct Capital Management LP Icahn Associates Corp. Third Point Management Co. LLC Icahn Associates Corp.

10,365,573

-6,970,000

4.65

6.97

13D/A

01-092013 01-082013 01-032013 01-022013

COMMERCIAL METALS

CMC US

5,805,986

-2,127,489

4.99

0.66

13D/A

HERBALIFE

HLF US

8,900,000

8,900,000

8.24

4.99

13G

COMMERCIAL METALS

CMC US

7,185,486

-747,989

6.17

0.78

13D

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This newsletter has been prepared by, and is subject to the copyright of, Geneva Partners S.A. (Geneva Partners). This newsletter is confidential and has been furnished to the intended recipient solely for such recipients information and private use and may not be referred to, disclosed, reproduced or redistributed, in whole or in part, to any other person. This newsletter has been prepared on the basis of information provided to Geneva Partners and publicly available information. This information has not been independently verified by Geneva Partners. This newsletter does not constitute a due diligence review and should not be construed as such. No representation or warranty as to this newsletter's accuracy, completeness or correctness is made and no reliance should be placed on the accuracy, completeness or correctness thereof. The information contained, and any opinions expressed, in this newsletter are subject to change at any time and Geneva Partners is under no obligation to inform the intended recipient or any other person of any such change. Geneva Partners accepts no responsibility or liability whatsoever in relation to this newsletter (including for any error or in relation to the accuracy, completeness or correctness of this newsletter). The exclusion of liability provided herein shall protect Geneva Partners, its officers and employees in all circumstances. This newsletter is not intended to form the basis of any investment decision and does not constitute or form part of any offer to sell or an invitation to subscribe for, hold or purchase any securities or any other investment, and neither this newsletter nor anything contained herein shall form the basis of or be relied on in connection with any contract or commitment whatsoever. This newsletter is not, and should not be treated or relied upon as investment research or a research recommendation under applicable regulatory rules. Geneva Partners is a member of the Swiss Association of Asset Managers (SAAM).

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