Hedge Fund Eton Park Increases Position in Airgas (ARG), Bets on Takeover ~ market folly

Tuesday, June 1, 2010

Hedge Fund Eton Park Increases Position in Airgas (ARG), Bets on Takeover

Due to activity on May 21st, 2010, Eric Mindich's hedge fund Eton Park Capital has disclosed an updated position in Airgas (ARG). Per a 13D filed with the SEC, we learn that Eton Park now has a 7.27% ownership stake in the company with 6,014,200 shares. This is an increase in their position as back on March 31st, 2010 they owned 3,910,000 shares. So, over the past two months, Mindich's firm has added 2,104,200 shares (a 53.8% increase in their position size). They spent $370 million to acquire the additional exposure and the filing did mention that part of this transaction was conducted on margin.

This makes Eton Park the second largest shareholder of Airgas (ARG), a company which recently received a buyout offer from Air Products & Chemicals (APD) for $60 per share. Eton is obviously wagering that Air Products & Chemicals will increase their offer as shares of Airgas are currently trading around $62, above the $60 offer price. Please also keep in mind that since Eton Park is an arbitrage focused fund, they most likely have hedged this position somehow (possibly via shorting shares of Air Products). They are not required to disclose short positions so we will not be able to see the other part of this trade they could theoretically have on.

For other recent investments from Eric Mindich's hedge fund, check out Eton Park's new position in Cohen & Company (COH) as well as their new stake in Sable Mining (SBLM). And for more of our coverage on Mindich, we recommend checking out some of his thoughts on whether or not there is alpha in asset allocation at a previous hedge fund panel.

Taken from Google Finance, Airgas is "a distributor of industrial, medical and specialty gases (delivered in packaged or cylinder form), and hardgoods, such as welding equipment and supplies. Airgas is a producer of nitrous oxide in the United States, the liquid carbon dioxide producer in the Southeast, the producer of atmospheric merchant gases in North America and a distributor of process chemicals, refrigerants, and ammonia products."

For the latest investments from prominent managers, head to our hedge fund portfolio tracking series.

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