Activist Starboard Value Gets Seats on Marvell Technology Group Ltd. (MRVL)’s Board; Two Other Hedge Funds Disclose Latest Moves

Billionaire Dan Loeb, one of the most scrutinized hedge fund managers and founder of Third Point LLC, believes that the hedge fund industry is in the “first innings of a washout in hedge funds and certain strategies”, as “most investors have been caught offsides at some or multiple points over the past eight months”. In a freshly-revealed letter to investors, Third Point said that the first quarter was “one of the most catastrophic periods of hedge fund performance that we can remember since the inception of this fund” in 1996. However, “volatility is bringing excellent opportunities” according to the New York-based hedge fund, so it does make sense to monitor hedge fund moves at this point in time. For that reason, the following article will discuss three SEC filings recently submitted by several widely-known investment firms such as Starboard Value LP.

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Activist Hedge Fund Starboard Reaches Settlement Agreement with Marvell Technology

According to a freshly-amended 13D filing, Jeffrey Smith’s Starboard Value LP currently owns 33.72 million shares of Marvell Technology Group Ltd. (NASDAQ:MRVL), which account for 6.5% of the company’s outstanding common stock. This stake includes 13.32 shares underlying call options. As revealed in Starboard’s initial 13D filing on the company, submitted with the SEC in early February, the activist hedge fund previously owned 34.74 million shares of Marvell Technology. The previous stake included the same amount of shares underlying call options. More importantly, Mr. Smith’s Starboard Value reached an agreement with the U.S. chipmaker under which three Starboard-nominees, Peter A. Feld, Richard S. Hill and Oleg Khaykin, were appointed to the Board. Marvell Technology Group Ltd. (NASDAQ:MRVL) also appointed Robert E. Switz as an additional independent director, so the size of the company’s Board was increased to ten seats from six. Under the terms of the agreement, Starboard Value has the right to recommend one additional independent director to the Board.

The shares of Marvell are down 25% in the past 12 months, as the company has faced mounting challenges, including an internal review of certain revenue recognized prematurely. In early March, the company’s Audit Committee also identified certain “tone at the top” issues, including significant pressure on sales and finance personnel to meet revenue targets, soon after which Chief Executive Officer Sehat Suturdja and his wife Weili Dai (President) stepped down. It has been previously rumored that Broadcom Ltd (NASDAQ:AVGO) was a possible purchaser of Marvell, but the company refuted any speculations that the two entities had engaged in discussions about a possible offer. A decrease in demand for Marvell’s storage products and the restructuring of its mobile platform business are anticipated to put weight on the company’s net revenue in fiscal 2016. Murray Stahl’s Horizon Asset Management cut its stake in Marvell Technology Group Ltd. (NASDAQ:MRVL) by 30% during the March quarter to 48,600 shares.

Let’s head to the next pages of this article, where we will discuss two other recent SEC filings.

First Eagle Investment Management Funds This Pharmaceutical Company

In a separate 13D filing, First Eagle Investment Management LLC, currently headed by President and Chief Executive Officer Mehdi Mahmud, reported owning 4.43 million shares of Aradigm Corporation (NASDAQ:ARDM), which include 575,815 shares of common stock issuable upon the conversion of the 9.0% Senior Convertible Notes due 2021 recently acquired by First Eagle. This represents an increase from the stake of 3.85 million shares disclosed in the firm’s 13F filing for the December quarter, so the aforementioned 13D was amended to include that First Eagle acquired $3 million of Convertible Notes that pay an interest of 9% per annum, payable semi-annually in arrears on May 1 and November 1 each year. The initial conversion price is $5.21 per share of common stock, which equates to an initial conversion rate of nearly 192 shares of common stock per $1,000 aggregate principal amount of Notes.

Aradigm Corporation (NASDAQ:ARDM) raised approximately $20.7 million in net proceeds from the private placement of $23 million aggregate principal amount of senior convertible notes due 2021, which will be used to fund the clinical development and regulatory submission for licensure of the company’s investigational product Pulmaquin inhaled ciprofloxacin. The emerging specialty pharmaceutical company that focuses on the development and commercialization of products for the treatment of severe respiratory diseases has seen its market value gain 20% since the beginning of 2016. The company’s lead development candidates are formulations of the potent antibiotic ciprofloxacin (Pulmaquin and Lipoquin), which are delivered by inhalation for the management of infections related to severe respiratory diseases such as cystic fibrosis (CF) and non-cystic fibrosis bronchiectasis (BE). Steven Cohen’s Point72 Asset Management LP owned 320,585 shares of Aradigm Corporation (NASDAQ:ARDM) at the end of December.

Ridgeback Capital Acquires New Stake in This High-Flying Biopharmaceutical Company

According to a Schedule 13G, Wayne Holman’s Ridgeback Capital Management LP acquired a new stake of 2.13 million shares of Celator Pharmaceuticals Inc. (NASDAQ:CPXX), which make up 5.2% of the company’s outstanding shares. The oncology-focused biopharmaceutical company that focuses on developing products to improve patient outcomes in cancer has seen its market value surge by a whopping 743% since the beginning of 2016, after reporting positive results from a Phase 3 study of VYXEOS in patients with high-risk acute myeloid leukemia (AML) in mid-March. The trial demonstrated a significant improvement in overall survival. To be more detailed on this disease, AML is a cancer of the bone marrow and blood, and accounts for 25% of all adult leukemias in the Western world. The American Cancer Society’s Cancer Facts & Figures estimates 19,950 new cases of AML in the U.S. during 2016. Meanwhile, the incidence is estimated to be 18,000 in Europe and 5,500 new cases in Japan.

At the end of March, Celator Pharmaceuticals Inc. (NASDAQ:CPXX) raised $40.6 million in capital through a public offering of 4.60 million shares of common stock, which include 600,000 greenshoe options, at a public offering price of $9.50 per share. The capital will be used to fund regulatory, manufacturing, commercial and clinical activities related to the aforementioned highly-promising drug candidate. Some analysts believe the company may represent a possible acquisition target, considering that VYXEOS’s faces no competition at this point in time and may serve as a worthy addition to some giant companies’ product portfolios. Hal Mintz’s Sabby Capital acquired a new stake of 337,462 shares of Celator Pharmaceuticals Inc. (NASDAQ:CPXX) during the December quarter.

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