TCI Fund's Presentation on Safran / Zodiac

Sir Christopher Hohn's hedge fund firm TCI Fund Management has put together a campaign trying to block Safran's takeover of Zodiac.

TCI has owned Safran for 5 years and as of the date of the letter owned 3.87% of the company.  They also own a much smaller position in Zodiac.  Basically, they're looking for a shareholder vote on the merger in an attempt to stop it.

Hohn writes, "In our opinion the fair value of Zodiac is around €20, which is way below the offer of €29.5 and so Safran’s  shareholders will suffer massive value destruction. The deal represents a  terrible return on investment (ROI) for Safran. Even in a best - case scenario, with  Zodiac’s margins recov ering  from  5%  to  14%,  the  after - tax  ROI  would  be  only  6%,  a  long  way  below  Safran’s cost of capital. At Zodiac’s current level of profitability the ROI of the deal would be just 2%."

Embedded below is TCI Fund's presentation on Safran / Zodiac:


Also embedded below is Chris Hohn's letter to Safran:


You can view the rest of TCI's materials at the website they've established for their campaign: A Stronger Safran.

For more on this hedge fund, we've posted up Chris Hohn's presentation on Charter Communications from the Sohn London conference.

Marc Lasry on Wall Street Week: "Huge Opportunities" in Energy Debt & Europe

Anthony Scaramucci and Gary Kaminsky this week on Wall Street Week interviewed Marc Lasry of Avenue Capital, which now has $14 billion in assets under management after initially starting with around $7 million.  Lasry likes to take fixed income risk but generate equity-like returns.


Lasry noted that he's been seeing "huge opportunities" in the energy sector, mainly due to the fact that oil's gone down.  He says you don't want to be an equity holder, but you want to be a senior debt holder.

He's also finding some investments in Europe as the banks over there are deleveraging.  Avenue is buying assets at 60-70 cents on the dollar from people who are required to sell due to regulatory pressure.

On what he looks for in an investment:  "We're trying to buy something we think is worth 100 cents for 60 cents on the dollar.  So you're always trying to buy something at a discount to what you think the asset value is.  And you can only do that when you're buying from non-economic sellers... someone who's nervous or somebody who has to sell.  So you need to have a lot of drama or issues around the world."

Embedded below is the video of Marc Lasry's appearance on Wall Street Week:



Be sure to check out previous Wall Street Week episodes like their interview with David Rubenstein as well as Steve Einhorn here.

Delivering Alpha Global Opportunities Panel: Perry, Briger, Mendillo & Erdoes

Today we're posting up highlights from CNBC & Institutional Investor's Delivering Alpha Conference.  We've already posted up the best ideas panel and the chase for yield panel, now we're posting up the global opportunities panel featuring Perry Capital's Richard Perry, Fortress' Peter Briger, Harvard Management's Jane Mendillo, and JPMorgan's Mary Callahan Erdoes.


Richard Perry (Perry Capital):  The hedge fund founder thinks the ECB will keep pumping liquidity into the system, straight to banks rather than governments.  He actually feels the crisis in Europe has been blown out of proportion (at least the extent of it) and it will be a smoother recovery than expected.  Perry feels the euro will survive.

Perry said he likes Italy and Spain sovereign debt but emphasized that he's a trader and could change his mind as fast as tomorrow and also said that "at the end of the quarter, you can't have Spain and Italy on your books."  (Related: we've highlighted how Dan Loeb's Third Point has been long Portuguese sovereign debt.)  Perry noted they've been worried about Spain for three years now.  He also says that in Washington they need to focus on spurring mortgage lending and focusing on immigration reform.


Peter Briger (Fortress):  Briger disagrees with Perry and feels that European bank balance sheets have lots of risk assets that haven't been priced appropriately, saying there's still a lot to work through (debt).  He basically wants to get excited about these opportunities but says prices aren't intriguing enough (cash is still king right now for him).  He says we're in a "period of transitional finance."  His favorite play is financial services "garbage collection" over the next 5 years.  He also mentioned that if he was a long-only investor, he'd be intrigued by the US mortgage market.


Jane Mendillo (Harvard Management Co):  She noted how she's seeing a lot of investors looking for distressed credit in Europe, almost in a frenzy, as there's more dollars than opportunities.  They are not piling in now but are indeed looking at long-term opportunities.  Her favorite space right now is natural resources as she thinks there's still inefficiencies there: farmland, energy, water, timberland, infrastructure.


Mary Callahan Erdoes (JPMorgan):  The CEO of JPMorgan Chase Asset Management said her top pick is to short the Euro.  Coming off a trip to Asia, she notes that investors over there are still looking at US opportunities. She also said that "buy and hold" is definitely dead.  Erdoes made the case for European equities (with an emphasis on luxury), calling it a stock picker's market.


Sources: Notes from readers, II's blog, @iimag, @ldelevingne, @footnoted, @aarontask


For more from the Delivering Alpha Conference, head to a summary of the best ideas panel featuring Leon Cooperman, Jim Chanos as well as the hunt for yield panel featuring Marc Lasry.