We’ve been writing a lot about NYC Pocket Change’s upcoming speed dating event, for “rich old women and hot young men” i.e. the greatest spectator sport of all time (Thursday!) and although many of you are all for being made kept boys, there remain a few who are uncomfortable with the shift in gender dynamics. Obviously I’m talking about Pirate Capital manager Tom Hudson and obviously I’m referring to his profile on SugarDaddyForMe.com, which purports to be “The Real Sugar Daddy Website.” It was recently forwarded our way and though we like to be skeptical about this sort of stuff after having been burned by the fake James Simons listing on CollarMe.com, nothing about the profile seems so outlandish as to have been made up by one of Hudson’s many, many disgruntled former employees. The part about his income being “more than $1,000,000” seems to be a bit of an exaggeration, considering that his flagship fund is currently managing about five bucks, to say nothing of all the dinero he sunk into printing up those proxy battle t-shirts, but I’m sure everyone rounds up on these things. Anywho.
The 6’1, 42 year-old Caucasian is looking for a 25-32 year-old cupcake with a “sense of humor” and “a brain” (not sure if that’s slang for waxed nether regions, I’ve heard it is). You must live in New York or being willing to relocate. You also “must be white.” No brown sugar for this sugar daddy. “Refined” only, thank you very much.
You might wonder if we have a problem with the racist overtones contained in Tom's profile. We don't. If that's his thing, well, that's his thing. What we have a problem with is the fact that the existence of this listing is more or less proof that Hudson couldn't make it work with Isa Bolotin, or sister Holly. And if the scions of soft rock can't make it work with this guy, it's probably a good indication that no one can (though Blarney will certainly try). And that's a shame on par with Pirate seeing about five units* worth of redemptions, because he already built that huge mausoleum, and if the slot for "dead wife" goes unfilled, well, that's just embarrassing.
Nevertheless, we're not giving up hope yet. In fact, we encourage the young ladies to give him a call on his direct line (203-890-2000). Other pertinent info, after the jump.
Unfortunately it looks one of Bess' favorite combinations - Pirate Capital and Michael Bolton - has come to and end. Isa Bolotin is going to Silver Point Capital in Greenwich.
Luckily, Bolton Daughter #2, Holly, is still on the ship's payroll, though for what, we're not sure. Still, Isa's departure is obviously a significant loss, inflicting wounds on our souls that only soft rock ballads can (attempt) to heal.
It’s common knowledge that Tom Hudson has pretty much run Pirate Capital into the ground, by allowing Michael Bolton’s daughters to construct all discounted cash flow models, structure all pair trades and calculate the firm's daily alpha. You knew that, we knew that, the employees at the Local PetSmart, who work on commission and had come to expect a minimum buy/day of whatever a truckload of minnows costs from Hudson knew that. Fucking Michael Bolton knew that. The one person who didn’t know that, or wouldn’t admit it to investors (“We’re having a great year!" "Don’t buy the hype!" "I’ve got a great pick called SMD that’s going to make us all rich!” he wrote last month) was Tom Hudson. Brother was in serious denial and was getting hard to watch. No longer.
Congratulations to Tom Hudson, whose hedge fund ended its proxy battle with Angelica, a healthcare linens company, after Angelica kowtowed to the Jolly Rogers’ demand to explore a possible sale. In July, the Pirate team, which owns approximately 9.8 percent of Angelica, told the firm to put itself on the block or prepare to go to war, and nominated two of its own to the board. Angelica stated yesterday that has given its financial adviser Morgan Joseph* the green light to pursue a sale. Hudson then withdrew his nominees for the board, based on the assumption that Morgan Joseph will have time to work on a deal, what with inner-office bitching between associates and analysts taking up a large portion of the day.
Though a previous proxy fight with energy company Aquila saw Pirate distributing buttons and t-shirts, circumstances of late, including but not limited to managed assets falling to $375 million from last year’s $1.802 billion, rendered the free-gift with purchase deal too costly. Why nobody thought to offer burned copies of Michael Bolton’s greatest hits is beyond us. Hindsight.
No one is getting off the Jolly Roger alive. Bloomberg is reporting that Tom Hudson’s Pirate Capital is shanghaiing investors, forcing them to remain on board its two Jolly Roger Activist funds by halting redemptions. The firm’s assets have declined by almost 80 percent in the past year, according to Bloomberg.
Pirate has said that the four stocks held by the funds are special investments—which, as best we can tell, means that Pirate isn’t willing to sell them immediately to meet redemption requests. The two funds, which are not even two years old, have declined from $150 million to $100 million since they were launched.
So what are the special investments?
“Hudson's letter didn't identify the four stocks held by the activist funds. Pirate's biggest holdings as of June 30 were armored carmaker Brink's Co.; auto-parts retailer Pep Boys-Manny, Moe & Jack; U.S. energy supplier Aquila Inc; and Angelica Corp., a provider of laundry and textile-rental services,” Bloomberg reports.
All is not lost for the Pirates however. They may not have much left in terms of assets. But they still have that special thing called “hope.” Bloomberg notes that while Pirate will continue to charge its 2 percent management fee, it “won’t collect its 20 percent cut of any profits until after until the positions are no longer deemed special investments.”
Our resident Pirate mole informs us that Tom Hudson has suspended redemptions following a 4% decline in August, and let two of his last remaining employees go (apparently “his best analyst” and “his”—apparently only—“trader”). This probably has little to do with the current state of the market, and is more so symptomatic of what happens when your hedge fund is run by a guy who spends his days printing up free t-shirts (in place of persuasive arguments) to give out during proxy battles, and dispatches interns to a PetSmart to buy minnows for bigger fish to devour in front of a staff busy not executing trades. On the bright side, Michael Bolton’s progeny is still with the firm.
With a recent bout of genius investors pulling out of Tom Hudson’s fund, Pirate Capital is down to $400 million in assets, from nearly $2 billion in 2006. London-based GAM pulled $300 million from the sinking ship last month, Naked Shorts reports, and was in good company with a bunch of smaller investors taking their money and running from a fund that employs Michael’s Bolton’s daughter in the increasingly irrelevant role of “investor relations.” Hedge Fund Alert speculated that GAM was troubled by “its size relative to Pirate’s capital base,” while Naked Shorts believes the pull-out had more to do with ideological differences between a “highly-regarded investor” and a low-rent circus clown partial to selling t-shirts out of the back of his car ship.
DealBreaker is not only a place for Wall Street gossip and a source for service journalism, but also a safe space in which readers should feel free to vent. If you have anything you want to get off your chest, we encourage you to go to your safe place (the comments section, our inbox), meet your animal guide (your keyboard), and tell us all about it. Like one loyal Dealbreaketeer who had some feelings about his time working for Tom Hudson that he needed to express.
We’re hearing that Tom Hudson—last seen “dispatching interns to a PetSmart store a half mile down the road [from his office] to buy minnows for his fish to devour, to the leering delight of his staff” and doling out proxy swag—is looking for a new crew to swab his deck. An anonymous source close to Pirate Capital tells us that Hudson is “looking for new investors in order to get the full tax benefit. Since he blew up his entire marketing staff (well, his entire staff in reality), he’ll be using two Investor Relations personnel (one of whom is Isa Bolotin), and a former intern. Looks like Tom Hudson finally got back to his roots after blowing out half his portfolio and producing zero returns for the year.” And also, on a personal note, blacklisting DealBreaker from receiving those super cool t-shirts (we have hard evidence, inquire within).
Hear anything? You know where to findus. And here’s a free one, just because we like the look of your face: Hudson’s gal-pal, Ms. Bolotin, is the offspring of none other than Mr. Michael Bolton. Who was born Michael Bolotin. Who may or may not have money invested in Pirate. Who can be seen here, singing and screwing up the National Anthem.
If Henry Blodget’s been Googling himself lately, he’s probably pretty pleased with the results: the “I own this town” picture to your left is the second thing that comes up when you search for images of the old rapscallion. If Henry Blodget’s been Googling Jim Cramer lately—and let’s be honest: that’s the more likely scenario—he’s probably very pleased with the results: some unhappy cult members are calling for Cramer's head.
On March 28 JC told viewers to sell shares of Dendreon, a biotechnology company in Seattle, a call that “turned out to be dead wrong.” The stock price has tripled since the day after Cramer’s recommendation (closing Thursday at $18.05.)
SEC filings make the best of us feel like we’ve been hit by a tranquilizer gun, which is why we don’t read them, and don’t like them read in our presence. Luckily, some of our friends are in constant need of a good excuse for why they were found passed out at their desks for the eighth (ninth, tenth, twentieth) time this month, and sent over this code red news: the free Pirate Capital t-shirts are SOLD OUT!!! In an SEC filing from today, Pirate Capital informed the gov that they’d changed amended some stuff on the site and that—like they and we had warned on Friday—Café Press would be sending out shirts to the first 2,000 people to sign up and the first 2,000 people to sign up only! (Actually, they’d originally said 1,000 but apparently Tommy-boy was feeling generous.) Never mind the fact that Pi-Cap had some homonym difficulties that were too great to solve before the filing was sent out—they’re not perfect and neither are you. You just need to focus on this: how you’re going to pry Carney’s hands off of one of the 50+ we had sent to the DB HQ.
In Carney’s haste to provide you with real news, re: Pirate Capital’s opposition to the sale of Aquila to Great Plains Energy, he failed to mention the most important part. Luckily, Commenter AJ did: FREE T-SHIRTS. Obviously these bad boys aren’t as chic as the DILF t-shirts we’ll be rolling out soon but they’re still pretty amazing and have a leg up on is in regards to the fact that they’re available NOW. Actually, only the first 1,000 people to sign up will be able to wear what Tom Hudson wears with pride, so act now. It goes without saying that we’ve already signed ourselves up but perhaps not without saying that we’ve also arranged to have one sent to Phillip Goldstein.
Four former employees of Tom Hudson's Pirate Capital have banded together to launch a new fund. Late last summer several analysts and other Pirate employees left the fund after coming to the conclusion that working for Tom Hudson kind of sucked.
Two former analysts and a portfolio manager from activist hedge fund Pirate capital have joined a new hedge fund started by another ex-Pirate colleague. Andrew Stotland, a former marketer at Tom Hudson’s Pirate Capital, formed FrontFour Capital Group and launched the event-driven fund at the beginning of the month.
Zachary George and David Lorber, former analysts at Pirate, and Carl Klein, the firm’s former fixed income portfolio manager, have now joined FrontFour Capital Management. The new hedge fund is expected to launch in the coming months. Its seed investment came from Weston-Atlas Partners, a joint venture between London-based alternative asset management firm Atlas capital Group and Weston Capital.
“New York-based FrontFour employs an event-driven strategy, investing across the capital structure, pairing fundamental analysis with the identification of specific catalysts,” Stotland said. He left Pirate Capital in August. He was responsible for raising the majority of the firms assets. George, Lorber and Klein were part of a group of staff members that left Pirate in September. They departed just as Pirate saw its performance fall below its historically high returns and the firm closed its funds to new investors so that it could control its overall growth. They are now principals at the new hedge fund.
Pirate Capital just got a bit wetter, liquidating it's entire stake in Mirant Corporation, according to an amended 13D filing. This follows on Pirate's recent exit from its position in James River Coal. Of course, rumors are already starting that the Pirates are pushing these investments off the plank in order to raise the cash to fund redemptions by investors who are worried that the funds managed by Pirate may be in full meltdown mode following the departure of many of it's assets. But, of course, we heard that from a competitor of Pirate's who would be all too happy for Pirate to meltdown, so you can take that with a grain of sea salt.
Pirate Capital has found a way to make news without losing money or staffers or getting investigated by the SEC. It’s getting back into the “activist investor” game again.
From 13D Tracker:
In an amended 13D filing on Brinks Co. (NYSE: BCO), 8.5% holder Pirate Capital disclosed a letter to the board of directors of the Issuer, among other things, encouraging the board to (i) take immediate steps to unlock long-term shareholder value by retaining an investment bank to explore the sale of the Company and initiate a large Dutch tender offer for the Shares, and (ii) immediately appoint Thomas R. Hudson Jr. to the board. The firm also recommended a substantial second Dutch tender offer for its stock.
But is this just empty saber-rattling? After the jump, take a look at the performance of Brinks stock for the last few years and see if you agree with Captain Tommy Hudson that the management of Brinks isn't doing enough for shareholder value.
Pirate Capital sold off a significant portion of its stake in James River Coal Company last week, according to recent SEC filings. Two funds managed by Tom Hudson and his pirates began selling off shares in James River last Wednesday at $9.91 per share. All told, the Pirate funds sold 868,973 shares for just under $10 per share on average.
As late as July, Pirate was still picking up shares of stock, according to SEC filings, and paying far more than last week’s selling price. The Jolly Roger Activist fund bought 400,000 shares in July, paying between $33 and $36 per share. Most likely the fund was obligated to purchase these shares when Merrill Lynch International exercised a put-option Pirate had agreed to as part of a back-to-back call and put option agreement signed up in January of 2006.
Pirate continues to own a significant stake in James River. According to its financial disclosures, it currently holds 8.8% of the outstanding shares.
It’s been a while since we checked in on Pirate Capital. Several weeks ago, the troubled Norwalk, Connecticut hedge fund was all over this page with news of mass analyst defections, loss-making sales of its large stake in the parent company of Outback Steakhouses, an SEC probe and a letter from founder Tom Hudson to the fund’s investors seeking to reassure them that the fund was not melting down.
After that the notoriously noisy hedge fund went quiet. The people handling press calls seemed program not say “no comment” to all inquiries. New letters from Hudson—either to investors or to companies in which Pirate funds hold positions—were not forthcoming. It seemed clear that Hudson had decided to bunker down and regroup.
Today Pirate is back in the news and its not pretty. It appears that the soaking Pirate took on its Outback position—buying a 5.3 percent stake when shares were priced at $42 to $39 and selling at $27.59 to $29.37 a share—might have been unnecessary. Yesterday the parent company of Outback announced a Bain Capital led leveraged buyout, sending the stock up to $39.72 a share. Ouch.
We’re told that this cute little foam boat was a promotional item handed out by Pirate Capital. We cannot really blame the crew at Pirate Capital for running with the Pirate ship theme in its promotional items when we can’t stay away from the puns ourselves. Even “Surrender The Booty” was pretty clever.
We’ve pretty much flooded the zone with Vega coverage today. But we haven’t forgotten about Pirate Capital, the Norwalk, Connecticut hedge fund run by Tom Hudson that suffered major staff defections last week. DealBreaker’s sources have been scurrying around collecting bits and pieces about what’s going on aboard the Jolly Roger and since it’s Friday and we’re in a sharing mood, we’re happy to show you what we’ve got. (And we’re going to try to keep the piracy puns to a minimum.)
We’re told that the exodus of talent at Pirate was not caused by the SEC investigation, as some initially speculated. It was dissatisfaction with compensation that drove the analysts to jump ship (sorry!), according to a source close to some of the analysts. Apparently the analysts anticipated that their year-end bonuses would be very low due to the fund’s poor performance. Cost cutting at the fund was apparently already underway. We’re told that Hudson stopped the firm-paid lunches and took the drinks out of the company fridge. (Editor’s Note: Is there even anywhere to eat lunch in Norwalk? Oh, of course there is. They’ve got two Wendys, one of them just up Connecticut Avenue from the Pirate ship shop.)
The Pirate Capital implosion continues apace. We’re hearing that Tom Hudson sounded tired and angry on a recent call with investors to discuss recent events—disclosure screw-ups leading to an SEC probe, underperforming the markets and recent staff defections—at the Norwalk, Connecticut based hedge fund.
The tone of the Pirates was called “defensive” by DealBreaker's source. Our favorite (unconfirmed) detail was that asked about where Zach George (subject of a lengthy and fawning profile in New York magazine last year) was going, Hudson is said to have responded with something along the lines of “Why the fuck would I care? He’s probably going snowboarding.”
Apparently, Pirate’s investors are not yet ready to surrender the booty. A source at one institutional investor has told us that it would be redeeming its investment in full. There is talk that many other fund-of-funds are following suit.
(DealBreaker relies on our readers for tips. That means you, people! Please email us at tips(at)Dealbreaker(dot)com. We are experts at keeping your identity secret. Have no fear.)
Foiling our plans to stowaway on the conference call Pirate Capital had scheduled for tomorrow with investors, the Norwalk, Connecticut hedge fund seems to have cancelled the call and plans to hold individual discussions with investors. So that cuts us out. But if you’re somehow part of one of meetings, or just hear a reliable report about what is said, please email the details to tips (at) dealbreaker (dot) com. We’ll totally protect your anonymity. Thanks!
Also, the latest word is that last week’s staff resignations were not really connected with the SEC investigation but stemmed from something much more ordinary—disputes over compensation. Pirate Capital cancels Oct 3 investor call-sources [Reuters]
Not surpisingly, Thomas Hudson doesn't mention a word about the SEC investigation that many reports indicate prompted this weeks mass resignations at Pirate Capital. Instead, he makes it sound like it was a decision he made to bring the fund back to its "roots."
Click here to download a pdf of the whole letter Hudson sent to Pirate Capital investors.
And thanks to the folks at finalternatives.com for hooking us up with the letter.
The Pirate Capital saga continues. Earlier this week, at least seven staffers jumped ship for comfortable ports.
Today Bloomberg is reporting that at least some of the departed are not happy with the letter from fund founder Thomas Hudson explaining the losses.
Hudson disclosed yesterday that analysts Zachary George and David Lorber resigned on Sept. 26, and Carl Klein, the firm's fixed-income portfolio manager, quit the next day. Hudson then fired analysts David Muccia and Matthew Goldfarb, according to his letter.
The letter didn't give a reason for the staff departures and Hudson declined to comment. Stephanie Tran, Peter Desloge, Glenn Haberfield and Chadd Kirk are still at Pirate Capital working with Hudson.
"What Hudson wrote in the letter to investors is a blatant mischaracterization of the circumstances of our departure,'' Goldfarb and Muccia said yesterday in a telephone interview. "We are currently exploring appropriate legal remedies.
We’re asked a lot about how you can get started in hedge funds. Here’s your chance. According to Bloomberg’s updated report, Pirate Capital may be looking for an analyst to replace the four who resigned or were fired this week. Get those resumes together and send them up to Norwalk!
Here’s Bloomberg’s quick summary of who walked the plank this week, and who is still aboard Captain Thomas Hudson’s ship.
The letter said analysts Zachary George and David Lorber resigned on Sept. 26, and Carl Klein, the firm's fixed-income portfolio manager, quit the next day. Hudson then fired analysts David Muccia and Matthew Goldfarb, the letter said.
Still at Pirate are Stephanie Tran, Peter Desloge, Glenn Haberfield and Chadd Kirk, according to the letter. Hudson said he may hire one analyst.
Pirate Capital has been hit with redemption notices from at least three fund of funds, with more expected, according to a DealBreaker source. The redemptions are said to be prompted by poor performance in recent months.
The fund has lost its marketing department as well as their analysts, according to the source. Among those we're told have left the fund is Zachary George, who featured so prominently in last year’s New York Magazine story (and is pictured in the item directly below this one.
“It's a bloodbath,” the source says.
The best (unconfirmed detail) we've heard is that just last week Pirate Capital had a boatcruise that left from Chelsea Piers. At the end of it, we're told they handed out baseball caps emblazoned with the motto "SURRENDER THE BOOTY." Emphasis now decidedly on Surrender.
Update: Bloomberg confirms: "Pirate Capital LLC said five of its ten investment professionals resigned and it will close its funds to new investments, according to a letter to investors."
Thomas Hudson, founder of the $1.7 billion fund, said in the letter that two analysts, Zachary George and David Lorber, have resigned from the firm. On Wednesday, fixed income portfolio manager Carl Klein resigned, said Hudson. Later on Wednesday, Hudson said he asked for the resignations of two other analysts, according to the letter.
"Effective Oct. 1, we are closing the funds to new investors," said Hudson in the letter. "I have no intention of liquidating positions or closing the firm. On the contrary, I fully intend to refocus, streamline and navigate the portfolio back to the positive performance I began the firm with."
Now CNBC's David Faber is reporting that all or most of Pirate Capital's analysts have left the fund following a dispute about handling the SEC investigation announced on Tuesday.
We’ve been writing a lot about NYC Pocket Change’s upcoming speed dating event, for “rich old women and hot young men” i.e. the greatest spectator sport of all time (Thursday!) and although many of you are all for being made kept boys, there remain a few who are uncomfortable with the shift in gender dynamics. Obviously I’m talking about Pirate Capital manager Tom Hudson and obviously I’m referring to his profile on SugarDaddyForMe.com, which purports to be “The Real Sugar Daddy Website.” It was recently forwarded our way and though we like to be skeptical about this sort of stuff after having been burned by the fake James Simons listing on CollarMe.com, nothing about the profile seems so outlandish as to have been made up by one of Hudson’s many, many disgruntled former employees. The part about his income being “more than $1,000,000” seems to be a bit of an exaggeration, considering that his flagship fund is currently managing about five bucks, to say nothing of all the dinero he sunk into printing up those proxy battle t-shirts, but I’m sure everyone rounds up on these things. Anywho. 
No one is getting off the Jolly Roger alive. Bloomberg is reporting that Tom Hudson’s Pirate Capital is shanghaiing investors, forcing them to remain on board its two Jolly Roger Activist funds by halting redemptions. The firm’s assets have declined by almost 80 percent in the past year, according to Bloomberg.
Our resident Pirate mole informs us that Tom Hudson has suspended redemptions following a 4% decline in August, and let two of his last remaining employees go (apparently “his best analyst” and “his”—apparently only—“trader”). This probably has little to do with the current state of the market, and is more so symptomatic of what happens when your hedge fund is run by a guy who spends his days printing up 
With a recent bout of genius investors pulling out of Tom Hudson’s fund, Pirate Capital is down to $400 million in assets, from nearly $2 billion in 2006. London-based GAM pulled $300 million from the sinking ship last month, Naked Shorts reports, and was in good company with a bunch of smaller investors taking their money and running from a fund that employs 
DealBreaker is not only a place for Wall Street gossip and a source for service journalism, but also a safe space in which readers should feel free to vent. If you have anything you want to get off your chest, we encourage you to go to your safe place (the comments section, our inbox), meet your animal guide (your keyboard), and tell us all about it. Like one loyal Dealbreaketeer who had some feelings about his time working for Tom Hudson that he needed to express. 
We’re hearing that Tom Hudson—last seen “dispatching interns to a PetSmart store a half mile down the road [from his office] to buy minnows for his fish to devour, to the leering delight of his staff” and doling out 
If Henry Blodget’s been Googling himself lately, he’s probably pretty pleased with the results: the “I own this town” picture to your left is the second thing that comes up when you search for images of the old rapscallion. If Henry Blodget’s been Googling Jim Cramer lately—and let’s be honest: that’s the more likely scenario—he’s probably very pleased with the results: some unhappy cult members are calling for Cramer's head.
Pirate Capital just got a bit wetter, liquidating it's entire stake in Mirant Corporation, according to an amended 13D filing. This follows on Pirate's recent exit from its position in James River Coal. Of course, rumors are already starting that the Pirates are pushing these investments off the plank in order to raise the cash to fund redemptions by investors who are worried that the funds managed by Pirate may be in full meltdown mode following the departure of many of it's assets. But, of course, we heard that from a competitor of Pirate's who would be all too happy for Pirate to meltdown, so you can take that with a grain of sea salt. 
Now CNBC's David Faber is reporting that all or most of Pirate Capital's analysts have left the fund following a dispute about handling the SEC investigation announced on Tuesday.