Hedge Fund Carlson Capital Goes Activist on Portec Rail Products (PRPX) ~ market folly

Thursday, December 16, 2010

Hedge Fund Carlson Capital Goes Activist on Portec Rail Products (PRPX)

Hedge fund Carlson Capital has gone activist on Portec Rail Products (PRPX) via a 13D just filed with the SEC. Carlson has disclosed a 5.2% ownership stake in PRPX with 503,674 shares. This is not a new position for the hedge fund as they previously owned 403,949 shares as of the end of the third quarter. As such, Carlson has recently purchased 99,725 additional shares of Portec Rail Products. In recent months, Carlson has also gone activist on Phoenix Technologies (PTEC) amidst takeover bids as well.

Today is 'merger arbitrage day' on the site and so we're taking a look at three separate arbitrage trades that prominent hedge funds have put on. As detailed in Carlson's 13D filing, here's a timetable of events that have taken place regarding PRPX shares:

- February 16th, 2010: L.B. Foster (FSTR) commenced a tender offer to purchase all PRPX shares at a price of $11.80 per share with the offer expiring on December 15th.

- August 24th, 2010: Sentinel Capital Partners expressed interest in acquiring all of PRPX shares at a price of $11.75.

- December 7th, 2010: Sentinel again expresses interest in acquiring all shares, but this time with an increased offer of $13.00 per share.

- December 15th, 2010: Per a PR release, "The tender offer for all of the outstanding shares of Portec expired at 5:00 p.m., New York City time, on December 15, 2010. As of that time, the depositary for the offer advised that approximately 7.63 million shares, representing approximately 79.46% of Portec's outstanding shares, were validly tendered and not withdrawn in the offer."

And late yesterday afternoon, Carlson Capital filed its 13D on PRPX and acquired the shares "pursuant to investment strategies, including merger arbitrage and event driven strategies, because they believed that Shares reported herein, when purchased, represented an attractive investment opportunity."

Will Carlson Capital's new activist push shake things up? While Portec Rail Products received offers at $11.80 and then $13.00, shares currently trade around $11.90. It remains to be seen as to whether or not Carlson will push for the higher $13 per share offer so we'll watch this one as it develops. In the mean time, you can also check in on Carlson's other activist investments including Hot Topic (HOTT) as well as Phoenix Technologies (PTEC).

Per Google Finance, Portec Rail Products "manufactures, supplies and distributes a range of rail products, including rail joints, rail anchors, rail spikes, railway friction management products and systems, railway wayside data collection and data management systems, and freight car securement systems."

For all our hedge fund activity tracking, scroll through our coverage of SEC filings here. Stay tuned for two more merger arbitrage related posts later this morning.

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