Steven Cohen's Hedge Fund SAC Capital Shows Talbots (TLB) Position ~ market folly

Tuesday, April 20, 2010

Steven Cohen's Hedge Fund SAC Capital Shows Talbots (TLB) Position

Due to activity on April 7th, 2010 Steven Cohen's hedge fund SAC Capital has updated their stake in The Talbots (TLB). SAC now shows a 9.5% ownership stake in TLB with 6,430,231 shares. This update comes after SAC recently disclosed a position in InterMune (ITMN) as well as a stake in Psychiatric Solutions (PSYS). In the fine print of their recent Talbots filing, we see that this position includes 1,325,000 shares subject to call options and 135,963 warrant shares.

This is a massive increase over SAC's previous TLB holdings. Their last 13F filing which disclosed positions as of December 31st, 2009 showed Cohen's firm owning 370,500 shares represented by call options and 320 shares of common stock. Over the past four months they've gained exposure to 6,059,411 shares, a 1,634% increase in their position. However, we're assuming they didn't simply buy shares on the open market. To see how SAC might have come about their ownership stake in TLB, we turn you to Perella Weinberg Partners' recently filed 13D on Talbots.

In Perella's filing, we see that they have an 8.1% ownership stake in TLB with 5,500,309 shares. On April 7th, Talbots completed its acquisition of BPW Acquisition Corp and BPW was merged into the company. As per the SEC filing, "upon consummation of the merger, subject to limited exceptions, each holder of shares of common stock of BPW immediately prior to the completion of the merger became entitled to receive 0.9853 shares in exchange for the cancellation of each such share of BPW common stock. In accordance with the terms of the merger agreement, the company also offered to exchange , for each outstanding warrant to acquire shares of BPW common stock, either (i) 0.09853 shares or (ii) 0.9853 warrants to acquire shares, in each case subject to certain specified proration mechanics."

You can read more about the merger here. While there's no way for us to know for certain how SAC came about their shares, this is a likely explanation given SAC's exposure to both common stock and warrants. But again, this is purely an assumption on our part. Keep in mind that Cohen's hedge fund is a trading oriented firm and turns their portfolio over much more frequently than all the other funds we cover on Market Folly.

Taken from Google Finance, The Talbots is "a specialty retailer and direct marketer of women’s apparel, shoes, and accessories. The Company operates stores in the United States and Canada. In addition, its customers may shop online or via its catalogs. The Company’s products are sold through its 587 stores, its circulation of approximately 55 million catalogs."

For more on Steven Cohen, check out all our coverage on hedge fund SAC Capital.

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