Hedge Fund Farallon Capital: Position Update & Internal Adjustments ~ market folly

Monday, November 2, 2009

Hedge Fund Farallon Capital: Position Update & Internal Adjustments

Due to activity on October 14th, 2009, Thomas Steyer's hedge fund Farallon Capital Management filed an amended 13D on Capitalsource (CSE). They are now showing a 3.9% ownership stake in the company with 12,582,795 shares, which is a decrease from their previous holdings. (As we covered in their previous filings with the SEC, Farallon has been selling CSE shares). Back in late September they owned a 5.7% ownership stake and obviously have since reduced their holdings down to their current 3.9% stake by selling 5,993,546 shares over the past month or so. You can view the rest of Farallon's holdings here, but keep in mind that they are set to update their disclosures here in the next few weeks with a new 13F filing.

We also got some news recently out of Farallon as it pertains to their future. They plan to make co-managing partner Andrew Spokes their 'key man' going forward, enabling a succession plan should Steyer ever depart (he has no plans to leave at this point). If both Steyer and Spokes were to leave, then the funds would be liquidated, giving investors complete transparency as to the firm's operating procedures going forward. Spokes previously was an executive director at Goldman Sachs and oversaw portfolio management for Noonday Global Management, a Farallon affiliate.

Farallon is a multi-billion dollar hedge fund founded by Thomas Steyer in 1986 that typically invests 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 landed them on the dreaded list of the top 10 asset losers. Read more about Farallon in our post covering their background and positions.

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