The Morning Brief: Hedge Funds’ Greek Bet Pays Off

November 28, 2012   Stephen Taub

It looks like some hedge funds that bought Greek debt are going to make good money on their investments. Under a deal struck Tuesday, Greece is expected to buy back bonds for around 28 to 34 cents on the euro. This would be higher than some investors paid for the debt in recent months, including Dan Loeb’s Third Point. In his third quarter letter to investors, Loeb said he paid 17 cents for a strip of Greek Government Bonds.

ConAgra Foods’ agreement Tuesday to pay $90 per share in cash for packaged food producer Ralcorp was a victory for shareholder activist Keith Meister's Corvex Management. The Carl Icahn prodigy had filed a 13D on Ralcorp in late August when he boosted his stake to more than 2.8 million shares, or 5.13 percent of the total outstanding, calling on the company to put itself up for sale or be an acquirer. He also joined Ralcorp’s board of directors in October. Corvex’s Ralcorp stake accounted for roughly 17 percent of its total U.S. equity portfolio.

Speaking of activist investors, Starboard Value, one of the busiest hedge fund firms plying that strategy these days, is turning up the heat on Office Depot. Starboard founder Jeffrey Smith has enlisted the help of two retail icons to help him figure out his next move on the stock. Starboard, whose ownership stake now stands at 14.8 percent, said in a regulatory filing it has hired Joseph Vassalluzzo and Robert Nardelli as advisors. Starboard agreed to pay each of the advisors an up-front fee equal to $40,000 in cash, which the pair agreed to use to buy Office Depot stock. Vassalluzzo is a former vice chairman of Office Depot rival Staples, while Nardelli is the former CEO of Home Depot and Chrysler.

Gramercy Advisors LLC has launched a new distressed credit fund. The $3.2 billion emerging-markets hedge fund firm, which is said to have received $200 million from investors for the new fund, see big opportunities from $1.8 trillion of emerging- market bonds and loans that are poised to mature by 2016.

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