Soros Firm Eyeing Activist Campaign?

Jun 30 2014 | 6:34am ET

An old dog has learned a new trick, with hedge fund pioneer George Soros dipping his toe into shareholder activism.

Actually, it’s Soros’ 45-year-old firm, now led by his sons and by chief investment officer Scott Bessent, doing the dipping, assailing oil and gas company Penn Virginia over its poor performance over the past five years. A letter to Penn Virginia last week, signed by Bessent, accused CEO Edward Cloues of “egregious” choices and a series of “investor relations disasters.”

Soros Fund Management, which became a family office three years ago, owns nearly 10% of Penn Virginia and is its largest shareholder. The firm wants the company to explore a sale, with Bessent writing, “We believe there are numerous potential acquirers who would be interested in acquiring the company at a material premium to its current trading price, as demonstrated by any number of precedent transactions in the industry.”

Instead of putting out a for-sale sign, Bessent complained, Penn Virginia proposed a convertible preferred share issuance, diluting existing investors by more than 20%. “The timing of this transaction was particularly egregious,” Bessent noted, but “the strategic rationale was not much better,” and the move’s announcement “has destroyed shareholder value.”

“The board’s decision to grow in this dilutive manner indicates to us that it is more interested in ‘empire building’ than maximizing shareholder value,” he continued, accusing the existing board of presiding “over a long period of decline.”

“We reserve the right to take any and all actions we believe necessary to ensure that shareholder value is not further eroded,” Bessent concluded.

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…