The Latest Moves Made by Billionaire George Soros’ Firm and Other Hedge Funds

A little more than a year ago, the U.S. Securities and Exchange Commission announced charges against numerous officers, directors and significant shareholders for violating federal securities laws after failing to file Form 4, 13D and 13G filings in a timely manner. This example provides evidence that the SEC keeps a close eye on these filings and attempts to enforce its deadline requirements. This is great news for individual investors who use these public filings as part of their stock picking process. Unlike 13Fs, the aforementioned filings tend to disclose fresh and up-to-date insights about hedge funds’ most prominent stances on different companies. The following article will discuss three such filings submitted with the SEC by several hedge funds monitored by Insider Monkey and the performance of the companies in question.

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In a recent 13G filing, George Soros’ Soros Fund Management reported a new stake of 1.40 million shares in Hercules Offshore Inc. (OTCMKTS:HEROQ), which accounts for 7.02% of the company’s outstanding common stock. The provider of shallow-water drilling and marine services to the oil and natural gas exploration and production industry filed for Chapter 11 bankruptcy protection in August to execute a $1.2 billion debt-for-equity swap with its noteholders as part of its financial restructuring. Earlier this month, Hercules Offshore Inc. (OTCMKTS:HEROQ) announced that the financial restructuring was completed and the company emerged from Chapter 11. Under the restructuring plan implemented by the company, Hercules exchanged its outstanding senior notes for 96.9% of the company’s common stock that was issued in the reorganization and raised $450 million of first lien debt with a maturity of 4.5 years and a bearing interest at LIBOR plus 9.5% per annum. The demand for Hercules Offshore’s oilfield services is mainly driven by its customers’ capital spending. However, the low oil-price environment has substantially reduced the demand for the company’s services, so it might take a while before the company gets back on track.

Let’s head to the next page, where we discuss two separate filings submitted by activist Sandell Asset Management and Aisling Capital.

In a freshly-submitted public filing with the SEC, Sandell Asset Management, founded by Tom Sandell, announced that independent proxy voting advisory firm Institutional Shareholder Services (ISS) recommended that Ethan Allen Interiors Inc. (NYSE:ETH)’s shareholders vote for the activist’s director nominees. Earlier this week, the home furnishings manufacturer and retailer released a public letter addressing its stockholders, urging them to vote against the activist hedge fund firm’s nominees at its annual shareholder meeting that takes place on November 24. As stated by Sandell Asset Management’s latest 13F filing, the activist firm holds a 1.37 million-share stake in Ethan Allen Interiors Inc. (NYSE:ETH). Let us also remind you that Tom Sandell and his firm recently expressed their belief that Ethan Allen has greatly underperformed its industry peers as a result of the poor leadership of CEO Faroow Kathwari and the company’s Board of Directors. Going back to the recently submitted filing, ISS acknowledged the inadequately-designed governance policies and the lack of accountability shown by Ethan Allen’s current Board, saying : “[T]he current board – despite the changes of the past half-decade – may still be poorly designed to help the company address the business and evolutionary challenges it faces, or to provide effective guidance to, and oversight of, the CEO”.

Meanwhile, the shares of the home furnishings retailer have declined by 10% since the beginning of the year. At the same time, the number of hedge funds within our database with positions in the company decreased to 13 from 14 during the June quarter, with them amassing 24.00% of its outstanding shares. Royce & Associates, founded by Chuck Royce, was the largest equity holder of Ethan Allen Interiors Inc. (NYSE:ETH) at the end of the third quarter, with 3.07 million shares.

According to a Form 4 filing, Dennis Purcell’s Aisling Capital purchased a 78,669-share block in Loxo Oncology Inc. (NASDAQ:LOXO) last week at a weighted average price of $27.65, boosting its stake to 3.53 million shares. The freshly-upped stake accounts for 21.16% of the company’s outstanding shares. The biopharmaceutical company, which develops drugs for patients with genetically defined cancers, has seen its shares soar by over 164% since the beginning of the year. Loxo Oncology Inc. (NASDAQ:LOXO) has made significant progress with its lead product candidate, LOXO-101, which is a potent and selective inhibitor of tropomyosin receptor kinase (TRK). TRK is a family of signaling molecules that are believed to boost the development of certain cancers. In September of this year, the U.S. Food and Drug Administration (FDA) granted the company orphan drug designation for this lead candidate, for the treatment of patients with soft tissue sarcoma. The biopharmaceutical company anticipates cash burn in the range of $30-to-$33 million this year and expects that its existing capital will be enough to fund operations until 2017. The company had aggregate cash, cash equivalents and investments of $93.4 million at the end of September, compared to $112.9 million registered at the end of December.

The number of smart money investors with the biopharmaceutical company in their portfolios at the end of the second quarter stood at ten, compared to 11 registered in the prior quarter. Even so, the value of the positions in the stock grew to $176.64 million from $123.02 million quarter-over-quarter. It is also worth pointing out that the hedge funds monitored by Insider Monkey owned 58.70% of the company’s outstanding shares on June 30. Aside from Aisling Capital, Samuel Isaly’s Orbimed Advisors held a 2.18 million-share position in Loxo Oncology Inc. (NASDAQ:LOXO) on September 30.

Disclosure: None