Hedge Fund Carlson Capital Files Amended 13D on Hot Topic (HOTT) ~ market folly

Tuesday, September 21, 2010

Hedge Fund Carlson Capital Files Amended 13D on Hot Topic (HOTT)

Dallas based hedge fund Carlson Capital just filed an amended 13D with the SEC regarding their activist position in shares of Hot Topic (HOTT). As we previously covered, Carlson owns a 3.96% stake in HOTT and that figure remains unchanged. The reasons for the amendment are as follows:

- Removal of "group" filing status: Previously, Carlson had joined up with Becker Drapkin Management, filing as a group for the purpose of this activist investment. Their collective stake in Hot Topic totaled 9.042% of the company. They are no longer adjoined as a group.

- Addition of both Stephen R. Becker and Matthew A. Drapkin to Hot Topic's board: The exhibits attached to the amended 13D filing propose adding the two gentlemen to Hot Topic's board. Neither work for Carlson and they are both proprietors of Carlson's former "group" member, Becker Drapkin Management.

- Standstill period: As of September 19th, 2010, members of either Becker Drapkin or Carlson will *not* acquire any securities of the company, will not submit any shareholder proposals, will not solicit proxies, and will not seek acquisitions regarding the company.

Given the legal nature of these document, there's plenty of fine print that you can read here. The 13D filing is accompanied by two exhibits. In the end, the main thing to take away from all of this is that Carlson has not adjusted their position, has abandoned "group" status for filing purposes, and seeks to put two individuals from Becker Drapkin on Hot Topic's board. We'll continue to watch this activist investing situation unfold. View our original coverage of Carlson's activist position here.

Taken from Google Finance, Hot Topic is "mall and Web-based specialty retailer operating the Hot Topic and Torrid concepts, as well as the e-space music concept, ShockHound. It sells a selection of music/pop culture-licensed and music/pop culture-influenced apparel, accessories, music and gift items for young men and women principally between the ages of 12 and 22."

For more in-depth coverage of hedge fund portfolios, scroll through our coverage of the latest SEC filings.

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