Nantahala Capital Management's Latest Activity ~ market folly

Friday, May 11, 2012

Nantahala Capital Management's Latest Activity

Wilmot Harkey's hedge fund Nantahala Capital Management recently filed two 13D's with the SEC.  The hedge fund primarily focuses on small caps and has a market-neutral discipline.

Imperial Holdings (IFT)

First, they've disclosed a 9.65% ownership stake in Imperial Holdings with 2,045,707 shares. The filing was made due to activity on May 10th and marks a .6% increase in their position size since the beginning of the year. 

In the 13D, Nantahala includes a statement in the purpose of transaction section:

"Bulldog Investors General Partnership, pursuant to an authorization statement dated April 25, 2012, which has been filed with the Securities and Exchange Commission, is soliciting from shareholders of the Issuer authorizations to demand a special meeting of shareholders to, among other things, amend the bylaws of the Issuer to increase the number of directors from seven to twelve and to elect five directors to fill the vacancies created by such increase.  The Reporting Person has determined to execute the revocable authorization supporting the calling of such meeting with respect to Shares reported in this Schedule 13D because it believes that it is in the best interests of shareholders for a meeting to be held to consider such matters. "

Per Google Finance, Imperial Holdings is "a specialty finance company with a focus on providing premium financing for individual life insurance policies issued by insurance companies and purchasing structured settlements backed by annuities issued by insurance companies or their affiliates. In its premium finance business it earns revenue from interest charged on loans, loan origination fees and agency fees from referring agents. In its structured settlement business, it purchases structured settlements at a discounted rate and sells such assets to, or finances such assets with, third parties."

Adams Golf (ADGF)

Second, the hedge fund has also filed an amended 13D on Adam's Golf (ADGF) and they've sold over half their position in the name.  They now own 3.927% of the company with 313,960 shares.  They sold on May 8th at a price of $10.75.

A few months ago, it was announced that TaylorMade-adidas Golf Company was acquiring Adams Golf for $10.80 in cash (shares currently trade around $10.78).  It appears as though Nantahala is ready to put some of this capital to work elsewhere with the deal spread pretty tight.

Per Google Finance, Adams Golf "designs, assembles, markets and distributes golf clubs for all skill levels. The Company’s products include Idea Tech V3 irons and hybrids, Idea a7 and a7 OS irons and hybrids, Speedline Fast 11 and Speedline 9064 drivers, Speedline Fast 11 fairway woods, and Idea Pro Black hybrids and irons."

For more from this hedge fund, we've posted up Nantahala's other recent portfolio activity here.

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