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.

Carlson Capital Starts New Activist Position in Hot Topic (HOTT)

Clint Carlson's hedge fund firm Carlson Capital just filed a 13D with the SEC regarding shares of Hot Topic (HOTT). Due to portfolio activity on August 23rd, 2010, Carlson has disclosed a 3.96% ownership stake in HOTT with 1,764,800 shares. This is a brand new position as they did not show ownership back on June 30th in their last portfolio disclosure.

This stake cost them $8,858,729 as the hedge fund purchased shares in the $4.80 to $5.45 range. Their filing becomes interesting when you read in the fine print that Carlson has entered into a "group" agreement with Becker Drapkin Management for the purpose of this investment. Collectively between both parties, they own 9.042% of Hot Topic, or 4,030,749 shares. Both Carlson and Becker Drapkin operate in Dallas, Texas.

Carlson has filed a 13D signifying activist intent in their investment. The filing states that the hedge fund believes the company is undervalued and plans to engage with HOTT regarding "the assets, business, strategy, capitalization, financial condition and/or operations." Carlson manages six hedge funds with over $4 billion in assets under management (AUM). They primarily pursue risk arbitrage, relative value arbitrage (long/short equity pairs), and credit arbitrage. This is the first time the firm has appeared on Market Folly and we'll continue to cover their movements in the future.

Taken from Google Finance, Hot Topic is "is a 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. At Torrid, the Company sells apparel, lingerie, shoes and accessories for plus-size females principally between the ages of 15 and 29."

For other recent hedge fund maneuvers, head to our coverage of the latest SEC filings.