Hedge Fund Harbinger Capital Reduces Stake in Tate & Lyle ~ market folly

Thursday, July 1, 2010

Hedge Fund Harbinger Capital Reduces Stake in Tate & Lyle

Phil Falcone's hedge fund firm Harbinger Capital Partners recently filed a regulatory disclosure in the UK regarding shares of Tate & Lyle (LON: TATE). While not a major change in position size, they've gradually reduced their stake over time and we now see that Harbinger owns 41,171,670 shares, or 8.95% of the shares outstanding. This disclosure was made due to activity on Thursday June 24th. We covered Harbinger's previous filing on TATE from back in October 2009 when they owned a 9.21% stake.

Let's take a historical look at their stake in Tate & Lyle: Hedge fund Harbinger started to really ratchet up their stake in early 2008. Their position then peaked at a high of 19% ownership back in July 2008. Since then, Falcone's firm has slowly decreased its position size to current levels. Over the past year or so, the press has speculated that Harbinger would completely sell out of the stake but that does not appear to be the case (at least for now).

It appears as though Harbinger's thesis with Tate & Lyle was a push for a link with Bunge (BG), the US food group which Harbinger also previously had an interest in. (Sidenote: Falcone's fund had sold out of Bunge a while back but when we looked at Harbinger's portfolio from the first quarter of 2010 we saw they re-initiated a new position in Bunge). Back in 2008, Tate & Lyle's then CEO Iain Ferguson said that Falcone's investment in the company stems from his habit of focusing on scarce assets that are hard to replicate.

Specifically in the case of Tate & Lyle, the scarce assets Falcone fixated on were its US plants, including the (then new) Fort Dodge plant in Iowa which was the first corn wet mill built in twelve years, along with the company's access to valuable slots on the US rail system. We'll have to see where this stake goes, but ever since 2008 it's been slowly and steadily reduced by the team at Harbinger Capital Partners. For more portfolio activity out of this hedge fund, check out their latest new position as well as our previous look at Falcone's portfolio.

Taken from Google Finance, Tate & Lyle "is a manufacturer of renewable food and industrial ingredients. The Company, through its subsidiaries, is engaged in developing, manufacturing and marketing food and industrial ingredients made from renewable resources. The Company operates through four divisions: Food and Industrial Ingredients, Americas; Food and Industrial Ingredients, Europe; Sugars, and Sucralose. Tate & Lyle participates mainly in four markets: food and beverage; industrial ingredients; pharmaceutical and personal care, and animal feed. The Company holds a 16.6% interest in Tapioca Development Corporation."

For more on the latest moves from prominent money managers, head to our coverage of hedge fund investments in the UK and scroll through our continuing hedge fund portfolio tracking series.

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