SPO Advisory Trims Stake in Embattled Resolute Energy Corp (REN), Plus Three Other Hedge Fund Moves

Billionaire Steve Cohen believes the hedge fund industry is currently crowded with too many money managers employing similar strategies. “One of my biggest worries is that there are so many players out there trying to do the same strategies […] if one big one goes down, will we take collateral damage?”, said the manager of family office Point72 Asset Management L.P. at the Milken Institute Global Conference in Los Angeles on Monday. Billionaire Cliff Asness, who also spoke in the panel discussion with Mr. Cohen, believes things will get better for the hedge fund industry, saying “I expect better than the last three to five years, but lower than history”. Assuming Mr. Asness’ prediction turns out to be accurate, it seems to be a good idea to have a look at several noteworthy hedge fund moves. So let’s discuss several SEC filings submitted earlier this week by widely-known investment firms monitored by Insider Monkey.

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Billionaire Mario Gabelli Cuts Stake in Brink’s Company

According to a freshly-amended 13D filing, Mario Gabelli’s GAMCO Investors and its affiliates currently own nearly 3.00 million shares of Brink’s Company (NYSE:BCO), which make up 6.12% of the company’s outstanding shares. This represents a decrease from the stake of 3.46 million shares disclosed in GAMCO’s previous 13D filing on the company, which was submitted with the SEC in late July 2015. GAMCO disclosed a stake of 2.48 million shares through the round of 13Fs for December quarter, but the stake does not include shares held by the firm’s affiliates. The provider of secure logistics and security solutions, including cash-in-transit, ATM replenishment, international transportation of valuables, and other services, has seen its market capitalization gain 17% since the beginning of 2016.

Brink’s Company (NYSE:BCO) had been under pressure from activist hedge fund Starboard Value LP, run by Jeffrey Smith, until the two parties reached an agreement in early January, under which three Starboard-designated directors were appointed to the Board. Similarly, the company said Chairman and Chief Executive Officer Thomas C. Schievelbein would step down at the annual meeting of shareholders or even earlier. The activist shareholder has voiced his discontent with the security company’s history of poor performance and missed execution, outlining that the company faced compelling opportunity to improve operating performance. Starboard Value LP had 4.58 million shares of Brink’s Company (NYSE:BCO) in its equity portfolio at the end of December.

Let’s head to the next pages of this article, where we will digest three separate SEC filings.

SPO Advisory Corp. Cuts Stake in This Struggling Oil and Gas Company

In a newly-amended 13G filing, John H. Scully’s SPO Advisory Corp. reported ownership of 4.82 million shares of Resolute Energy Corp (NYSE:REN), which account for 6.3% of the company’s total number of outstanding shares. This marks a decrease of 10.17 million shares from the position disclosed in SPO Advisory’s 13F filing for the fourth quarter of 2015 and a decrease of 10.24 million shares from the stake revealed in the fund’s previous 13G filing on the company, submitted with the SEC at the end of October.

Resolute Energy operates as an independent oil and gas company whose asset base comprises properties in Aneth Field in the Paradox Basin in southeast Utah and the Permian Basin in Texas and southeast New Mexico. Resolute Energy Corp (NYSE:REN) seems to have an extremely weak balance sheet, as the company’s outstanding indebtedness reached $528.3 million at the end of December. The oil and gas company had only $9.30 million in cash and cash equivalents at the time, as well as an unused borrowing base of $145 million under its credit facility. The company’s capital spending for 2016 is anticipated to be in the range of $115 million-to-$135 million, with 75% channeled into Permian Basin development and 10% into maintenance spending in Aneth Field. Shares of Resolute Energy are down 32% year-to-date. Sageview Capital, founded by Edward Gilhuly and Scott Stuart, owned 5.08 million shares of Resolute Energy Corp (NYSE:REN) at the end of 2015.

Elliott’s Subsidiary Gets another Board Seat at CorMedix

As revealed by a 13D filing, Paul Singer’s Elliott Associates L.P. and its affiliates collectively own 3.80 million shares of CorMedix Inc. (NYSEMKT:CRMD), which include 2.30 million shares issuable upon the conversion or exercise of certain convertible securities. This represents an increase from the stake of 3.60 million shares disclosed in Elliott’s previous 13D filing on CorMedix, submitted with the SEC in early August. The latter stake included 2.10 million shares issuable upon the conversion or exercise of convertible securities. More importantly, the filing was amended to add that Manchester Securities Corp., a wholly-owned subsidiary of Elliott Associates, exercised its right to appoint a second member to the company’s Board of Directors pursuant to the backstop financing agreement reached in March 2015. As a result, Myron Kaplan was appointed to the Board effective on April 27, 2016.

CorMedix Inc. (NYSEMKT:CRMD) in-licenses, develops and commercializes prophylactic and therapeutic products for the prevention and treatment of infectious and inflammatory diseases. The company currently focuses on an ongoing U.S. Phase 3 clinical trial that evaluates the safety and efficacy of Neutrolin, an anti-infective solution for the prevention of catheter-related infections and thrombosis, in hemodialysis patients. CorMedix shares have gained an impressive 111% since the beginning of 2016, but they are down 45% in the past year. Israel Englander’s Millennium Management acquired a new stake of 60,322 shares of CorMedix Inc. (NYSEMKT:CRMD) during the December quarter.

Proxy Advisory Firms Support 2 out of 3 Engaged’s nominees in Proxy Contest with Benchmark Electronics

Let’s wrap up our discussion by having a look at the ongoing proxy fight between Glenn W. Welling’s Engaged Capital LLC and Benchmark Electronics Inc. (NYSE:BHE). In a recent SEC filing, Engaged Capital disclosed that independent proxy advisory firm Glass Lewis & Co. recently recommended Benchmark shareholders to vote for the election of the activist shareholder’s director nominees, Robert K. Gifford and Jeffrey S. McCreary, to the Board at the company’s upcoming annual meeting of shareholders.

Engaged Capital, which owns 2.43 million shares of the electronics manufacturing services company, has been seeking the support of shareholders to land three director nominees on Benchmark Electronics Inc. (NYSE:BHE)’s Board at the May 11 annual shareholder meeting, but Glass Lewis & Co. recently recommended Benchmark shareholders vote against the appointment of the third Engaged-designated nominee, Brendan Springstubb. This comes after another leading proxy advisory firm, Institutional Shareholder Services Inc. (ISS), issued a similar endorsement last week. To be more detailed on what Glass Lewis & Co. commented about this proxy contest, the proxy advisory firm believes “the Dissident [Engaged Capital] has established a compelling case that additional changes at the board level are warranted at this time. All in all, it appears that Benchmark does require “a fresh shareholder-focused perspective in the boardroom”. Royce & Associates, founded by Chuck Royce, held a 2.43 million-share position in Benchmark Electronics Inc. (NYSE:BHE) at the end of December.

Disclosure: None