Scopia Capital Boosts Stake in CONMED, Plus 2 Other Ongoing Activist Battles

According to HFR, hedge fund clients pulled more capital out of the hedge fund industry during the final quarter of 2015 than they invested, marking the first quarter with net capital outflows in four years. According to global database provider eVestment, investors withdrew an additional $19.75 billion out of the hedge fund industry in January, which was the largest “January” outflow since 2009. It is true that some investors are reducing commitments to the smart money industry, but the hedge fund industry is anticipated to keep growing in the years ahead despite delivering a poor performance in recent years. Experienced equity investors usually seek for each piece of information they can get their hands on before investing, while Schedule 13G, 13D, and Form 4 filings usually provide additional information retail investors can use as part of their selection and analysis process. For that reason, this article will discuss three SEC filings submitted by a few hedge funds tracked by Insider Monkey, so let’s take a look at several fresh moves in the hedge fund industry.

At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

A freshly-amended 13D filing reveals that Bulldog Investors LLC, managed by Phillip Goldstein, Andrew Dakos and Steven Samuels, currently owns 3.93 million shares of Hill International Inc. (NYSE:HIL), which account for 7.60% of the company’s outstanding common stock. Although the fund’s stake has not suffered any changes since the previous 13D filing on the company submitted in mid-March, the most up-to-date 13D is amended to add that Bulldog Investors sent a letter to the company’s independent directors on March 29. The letter recommends the company’s independent directors to “arrange a brief in person or telephonic meeting” that would discuss the ground rules for the upcoming meeting of shareholders to make certain that the meeting is “conducted fairly”. In fact, the letter kindly urges directors to fulfill their duty to “afford Hill’s shareholders a fair opportunity to exercise their franchise right”. Bulldog Investors also reminded the provider of construction consulting services that it lost a lawsuit last year in which an affiliated of Bulldog sued for the right to nominate candidates and present proposals at the company’s annual meeting of shareholders. Let us remind you that Bulldog Investors has been urging the company to explore alternatives to maximize shareholder value, but Hill International’s Board rebuffed the proposal saying that this move was not in the best interest of Hill and its shareholders.

In early May 2015, Hill International Inc. (NYSE:HIL) received an offer of “not less than $5.50 per share” from D.C. Capital Partners, but the company refused the buyout offer. Shares of Hill International are down 11% since the beginning of 2015 and trade at a 60% discount to the $5.50 price tag, so it is quite evident why Bulldog Investors is seeking to make changes to the composition of the company’s Board. Nonetheless, Hill’s management believes that 2015 was a turnaround year in terms of growth and profitability and the company’s financial results prove the truth of their words. Hill International generated total revenue of $720.61 million in 2015, which increased from $641.59 million in 2014. The company also undertook some cost cutting efforts, which reduced overhead costs on an annualized basis by roughly $21.0 million. Net earnings for 2015 totaled $7.74 million, as compared to a net loss of $4.85 million reported for 2014. A total number of 11 hedge funds from our system were bullish on Hill at the end of the December quarter, accumulating nearly 17% of its outstanding shares. Peter Schliemann’s Rutabaga Capital Management reported owning 2.79 million shares of Hill International Inc. (NYSE:HIL) through its 13F filing for the fourth quarter.

The final two pages of this article study two separate SEC filings freshly submitted by two investment firms tracked by Insider Monkey.