Thomas Steyer's Farallon Sells Capitalsource (CSE) Shares ~ market folly

Tuesday, September 29, 2009

Thomas Steyer's Farallon Sells Capitalsource (CSE) Shares

In an amended 13D filed with the SEC after the close yesterday, Thomas Steyer's hedge fund Farallon Capital has updated their stake in Capitalsource (CSE). The filing was made due to activity on September 17th, 2009 and they now show a 5.7% ownership stake with 18,576,341 shares. This is down from their previous stake as they have sold 8,084,981 shares (or about 2.5% of their ownership stake) since August 14th of this year. While we don't like to speculate as to why a fund might be selling a particular security, it wouldn't be out of the ordinary for them to solely be locking in some profits here as the stock has enjoyed quite a healthy run. CSE is interesting because as we've noted in the past, fellow prominent hedge fund player Seth Klarman has invested a lot of his Baupost Group's cash into Capitalsource as well. We'll continue to watch their movement in this name. In terms of other notable activity, we also saw Farallon update their position in Global Gold (GBGD). Additionally, head over to our post to check out the rest of Farallon's portfolio.

Farallon is a multi-billion hedge fund founded by Thomas Steyer in 1986. They usually invest in equities, private investments, debt, and real estate. While they have a solid track record, 2008 was definitely a chink in the armor. After receiving redemption requests for almost 25% of their main fund's capital, they suspended withdrawals. Their poor 2008 also put them on the dreaded list of the top 10 asset losers.

Taken from Google Finance, Capitalsource is "a commercial lender that provides financial products to middle market businesses. Through its wholly owned subsidiary, CapitalSource Bank, the Company provides depository products and services in southern and central California. It operates through three segments. The Commercial Banking segment comprises the Company’s commercial lending and banking business activities. The Healthcare Net Lease segment comprises its direct real estate investment business activities. The Residential Mortgage Investment segment comprises the Company’s remaining residential mortgage investment and other investment activities, in which it formerly engaged to optimize its qualification as a real estate investment trust."

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