The Morning Brief: Eminence Ends Tailored Brands Saga

May 10, 2017   Stephen Taub


The hedge fund firm bailed out of the men’s apparel maker and one-time activist target.

Ricky Sandler’s Eminence Capital finally threw in the towel on Tailored Brands. The hedge fund firm recently disclosed in a regulatory filing that it sold its entire stake, mostly for $12.20 per share. This is more than 50 percent below the stock price at year-end. The men’s clothing retailer was formerly known as Men’s Wearhouse, a one-time Eminence activist target. In February Eminence had boosted its stake to 14.9 percent.

In March the board of directors of Tailored Brands agreed to nominate Sandler to its board at the company’s upcoming annual meeting. But last month Sandler decided not to stand for election, citing in a regulatory filing at the time "significant demands on his time relating to Eminence’s other portfolio investments and his executive obligations."

He also stressed the decision "was not related to any disagreement or dispute" with the company. What he apparently didn’t say was he was fed up with the investment and bailing out altogether. Shares of Tailored Brands surged nearly 3 percent on Tuesday, to close at $12.63.

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Discovery Capital Management unloaded nearly 6.2 million shares of Peabody Energy for $23.09 per share, reducing the stake to 4.9 percent. This means it no longer has to make timely filings when it sells additional shares of the coal giant.

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Shares of Valeant Pharmaceuticals International surged nearly 25 percent on Tuesday, to close at $12.09, after the company reported a big cut in its debt. The company announced that in the first quarter it cut debt by $1.3 billion and lopped off $3.6 billion in debt since the end of the first quarter of 2016. It also said it successfully refinanced its debt, enabling it to reduce its debt maturity profile.

It increased its mixed of fixed debt with floating rate debt and increased covenant flexibility, it said. In its quarterly report, Valeant also said it completed more than $1.3 billion in asset sales, including the earlier than expected closure of the sale of the CeraVe, AcneFree, and AMBI skincare brands, and is on track to close the sale of Dendreon Pharmaceuticals for $819.9 million in cash proceeds by mid-year.

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Farallon Capital Management participated in the $550 million Series E financing of Sea Limited, a shopping and online games company that is being called by some as southeast Asia’s most valuable start-up. The company, which is competing with Alibaba and others, was also rebranded from its former name, Garena, according to Bloomberg.


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