Jeffrey Altman's Owl Creek Raises Visteon Stake (VC)

Jeffrey Altman's hedge fund firm Owl Creek Asset Management recently filed a 13G with the SEC regarding shares of Visteon (VC).  Per the filing, Owl Creek has disclosed a 5.57% ownership stake in VC with 2,933,100 shares.

This marks a 27% increase in their position size since the end of the second quarter.  Visteon emerged from bankruptcy two years ago and they recently sold their automotive lighting business.

Numerous other hedge funds and private equity firms continue to hold stakes including the likes of JANA Partners, Centerbridge Partners, SAC Capital, Monarch Alternative Capital, Ascend Capital, and Tremblant Capital, among many others.

Per Google Finance, Visteon is "a global supplier of climate, electronics, interiors and lighting systems, modules and components to global automotive original equipment manufacturers (OEMs). The Company operates in five segments: Climate, Electronics, Interiors, Lighting and Services."

Jeffrey Altman's Owl Creek Boosts Cigna Position

Jeffrey Altman's hedge fund Owl Creek Asset Management filed a 13G with the SEC on their position in Cigna (CI). Due to portfolio activity on October 27th, Owl Creek has disclosed a 5.14% ownership stake in Cigna with 13,896,771 shares.

This is an increase of almost 66% in their position size. At the close of the second quarter, they only owned 8,396,087 CI shares.

Owl Creek Asset Management also recently disclosed a new position in Lone Pine Resources (LPR). They acquired this position via their stake in Forest Oil (FST) which distributed a special dividend of LPR shares to FST shareholders.

In other portfolio updates from this hedge fund, we've also detailed how Owl Creek has been active in YRC Worldwide (YRCW).

Per Google Finance, Cigna is "a global health service organization with subsidiaries that are providers of medical, dental, disability, life and accident insurance and related products and services. In the United States, these products and services are offered through employers and other groups and in selected international markets, CIGNA offers supplemental health, life and accident insurance products, expatriate benefits and international health care coverage and services to businesses, governmental and non-governmental organizations and individuals."

Owl Creek & Cyrus Capital Active in YRC Worldwide (YRCW)

Hedge funds have been active in shares of YRC Worldwide (YRCW) recently. Jeffrey Altman's hedge fund Owl Creek Asset Management and Stephen Freidheim's Cyrus Capital Partners recently filed various forms with the SEC regarding the company. There are a lot of moving parts to their positions, so let's dig in.

Owl Creek Asset Management's Position

The 13G shows the latest activity as of September 16th and reveals Owl Creek has a 17.4% ownership stake in YRC Worldwide. This is based on 75,011,292 shares of common stock, 218,570,388 shares of common stock issuable upon conversion of Series B notes ($13,507,650 in aggregate principal amount), and finally 94,284,663 shares of common stock issuable either as make-whole shares or upon conversion of the PIK notes.

Digging into the footnotes, we see that Altman's hedge fund holds $17,573,269 in aggregate principal amount of 10% Series A Notes. These notes are not convertible until July 22, 2013 and the current conversion price is $0.1134.

Their Form 4 filed with the SEC shows they sold common stock in YRCW in the latter half of September, reducing their position from 110.5 million shares down to the current 75 million shares. The majority of their sales came at $0.07x.

For all the particulars of Owl Creek's position in YRCW, head to their 13G here. We also recently detailed how Altman's firm started a position in Forest Oil (FST).


Cyrus Capital Partners' Position

Stephen Freidheim's hedge fund Cyrus Capital actually filed an activist 13D on the company compared to Owl Creek's passive 13G. Cyrus revealed a 20.3% ownership stake in YRCW with 447,860,113 shares. This includes 289,738,036 shares of common stock issuable upon exercise of the Series B notes. For all the fine print of Cyrus' filing, head here.


YRC's Reorganization

YRCW is currently trading around $0.059 and underwent a charter amendment merger on September 16th, "whereby a wholly-owned subsidiary of the Issuer merged into the Issuer and the certificate of incorporation of the Issuer was amended and restated to increase the number of common stock authorized."

Due to this, the above hedge funds' preferred stock automatically converted into common stock and the Series A notes became convertible two years from the date of issuance (as detailed above). The Series B notes became immediately convertible at a fixed price into shares of common stock.

The company recently announced that Jeff Rogers will be YRC President and Mike Naatz will be Holland President, both reporting to YRC Worldwide CEO James Welch. Some analysts, though, haven't ruled out a bankruptcy filing for the trucking company.

Per Google Finance, YRC Worldwide is "a holding company. YRC Worldwide, through wholly owned operating subsidiaries offers its customers a range of transportation services. These services include global, national and regional transportation, as well as logistics."

Jeffrey Altman's Owl Creek Starts Forest Oil (FST) Stake

Jeffrey Altman's hedge fund firm Owl Creek Asset Management recently filed a 13G with the SEC disclosing a position in Forest Oil (FST). Per trading activity on September 6th, Owl Creek has revealed a 5.04% ownership stake in FST with 5,760,829 shares.

This is a brand new position for the hedge fund as they did not own a stake at the end of the second quarter. Forest Oil recently announced a special dividend to investors of 70 million shares of Lone Pine Resources (LPR) that are owned by Forest.

The distribution will be made on September 30th for shareholders on record as of September 16th. For every one share of FST owned, shareholders will receive 0.612 of a share of Lone Pine common stock.

Per Google Finance, Forest Oil is "an independent oil and gas company engaged in the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids in North America."

Back in 2010 we also detailed Altman's appearance on a hedge fund panel where he talked about how his firm had tail hedges via S&P puts and CDS because they were worried that the government wouldn't be able to do much in the event of another economic problem since rates were already at 0%. Though the recent volatility hasn't been as drastic as 2008, that was still prescient hedging.

Hedge Fund Panel: Credit Opportunities In The Current Environment (Lasry, Altman, Eberts)

This is the last article in a series on the hedge fund panels that recently took place. Over the past few days, we've covered an introductory post that outlined key takeaways from the event and a separate post that detailed the "Case For Global Equities in 2010" from a panel of prominent long/short equity hedge fund managers. Additionally, we highlighted the hedge fund manager panel on the global investment landscape in 2010 as well as the discussion of alpha in asset allocation.

The last hedge fund panel we're covering includes thoughts from Anchorage Advisors' Kevin Ulrich, Avenue Capital's Marc Lasry, Goldman Sachs' Kenneth Eberts, and Owl Creek's Jeffrey Altman.

Credit Opportunities In The Current Environment: Where Do We Go From Here?


The panel agreed that 2009 was fueled by liquidity. They note that the easy money has been made and many situations actually played out very fast. The cycle is not over; there is more to come and there was disagreement as to where the most opportunity was: mid-caps or large credits that are restructuring.

Marc Lasry (Avenue Capital): Lasry thinks that the large cap opportunities are gone for 2010 and that mid-caps provide the best opportunity as there is still $1 trillion to be re-financed there. Avenue really likes restructurings and is adding to their staff to take advantage of it. Lasry thinks that middle market companies are discounted since there's not much liquidity (banks aren't providing them capital). He mentioned that in 2009 you "had" to be invested and you can tell who did well from a credit perspective by looking at the returns. Avenue's international fund was up 66% last year as detailed in our post on 2009 hedge fund performance numbers.


Jeffrey Altman (Owl Creek Asset Management): Altman and Owl Creek are contrarians by nature and think the opportunities will be in one-off's rather than entire sectors like it was in 2009. They see opportunity in finance and healthcare because many other investors aren't fond of those arenas as they are filled with volatility. Last year, they mainly focused on process driven trades and as those are maturing, they're interested in moving forward with LBO's that needed restructuring. Right now they have tail hedges on via S&P puts and CDS because they are worried that if there is another economic/financial problem that the government won't be able to do much since rates are already at 0%. Overall though, Altman sees opportunity for those with capital to deploy as private equity firms and banks are doing less in the arena.


Kenneth Eberts (Goldman Sachs): Eberts mentioned that Goldman Sachs Investment Partners was heavily invested in capital structure arbitrage in 2009 as they thought it was the best way to own the economic tails (buy equity, short debt). Moving to 2010, they are honing in on the short side in investment grade as they feel it is the 'worst priced' since it's the tightest. He notes that if everything is fine and dandy in the world, they won't move much. However, if we start to see problems again, these will be seen as mis-priced and will fall hard. Lastly, he thinks that if China doesn't buy the excess Treasuries supply coming to market in 2010 that you could see a credit widening.


Kevin Ulrich (Anchorage Advisors): Ulrich focused on how the liquidity-driven 2009 is a thing of the past and that there are still opportunities on the long side in the distressed segment. Anchorage likes cyclicals near-term as there is an opportunity to benefit from financial and operational leverage. He mentions that credit default swaps (CDS) are still the best way to short, but notes they have definitely become less liquid. However, he does think a clearing house would be an improvement.


That ends the coverage of the conference. Head to all the posts on the hedge fund panels including:

- The Case For Global Equities in 2010

- Is There Alpha in Asset Allocation?

- The Global Investment Landscape in 2010

- Key Takeaways From The Event