ValueAct Capital Management is a leading activist fund that acquires shares in public companies to influence their boards to make certain actions or to fix current problems. In an SEC Filing, the fund (through multiple entities) has just disclosed that now holds over 2.51 million shares, or some 6.7% of Chimera Investment Corp. (NYSE: CIM). As of December 31, 2007, ValueAct had a 1 million share stake for some 2.65% of the shares outstanding.
For those of you who don’t know Chimera, this is the one we praised for being the first mortgage vulture to file seperately to come public last year. That worked incredibly well, for a while. Then the woes started spreading there as no one was immune. The fact that Annaly Capital Management, Inc. (NYSE: NLY) was sponsor and much of the team was the same only gave it more credibility.
But Chimera, after almost seeing $20.00 has slid to a low of $10.59 and shares closed at $12.24 today. It has been punished.
In the filing, it notes, "…changes in the Issuer’s operations, business strategy or prospects, or from sale or merger of the Issuer. To evaluate such alternatives, the Reporting Persons will routinely monitor the Issuer’s operations, prospects, business development, management, competitive and strategic matters, capital structure, and prevailing market conditions, as well as alternative investment opportunities, liquidity requirements of the Reporting Persons and other investment considerations. "
These purchases were made from March 11 to April 23 at prices of $11.76 to $12.99. Chimera closed up 3.6% at $12.24 today and shares have not reacted in after-hours trading.
You can join our open email distribution list to hear about other activist investor activities, restructurings, spin-offs, IPO’s, special financings, and more special situation previews.
Jon C. Ogg
April 24, 2008