market folly

James Dinan's hedge fund York Capital recently filed a 13D with the SEC disclosing a new position in shares of Sybase (SY). This is the first time we've really detailed the portfolio activity out of York Capital so here's a brief background: Dinan's firm is a hedge fund that invests in both public equities and fixed income. Their primary focus is companies with catalysts such as mergers & acquisitions, restructurings, special situations, distressed plays, etc. Taken from York's website, they think that, "While the markets may be efficient on balance, there are pockets of inefficiency that can be exploited by experts who know where to look." York was founded in 1991 by Dinan and today manages over $12 billion. At the end of the first quarter, we saw that York was up 4.52% for the year in our hedge fund performance post.

Due to activity on May 13th, York has disclosed a 4.2% ownership stake in Sybase with 3,659,183 shares and the aggregate amount of funds used to purchase these securities was $273,603,384. Keep in mind that a 13D filing signifies an activist stake so we'll have to see what York has planned. Per the filing, Dinan's firm says they acquired shares "for investment purposes and not with a view towards changing or influencing control of the company." They bought shares after a tender offer was announced by Sheffield Acquisition Corp for all of Sybase's outstanding shares.

It looks like York purchased the majority of their position in the $64.xx range on May 12th & 13th. However, they also disclosed a steady stream of sales from May 19th to May 21st, and it's not clear if they're still reducing their position. But, the filing does note that on May 21st, York ceased to be the beneficial owner of a 5% stake in the company. While this is just speculation on our part, it's almost as if they bought a large position which triggered a regulatory filing, but they are already reducing or winding down this position. Unfortunately there is no information as to whether or not they've continued selling this week; the filing only encompasses sales up to May 21st.

At a recent investment conference, hedge funds Highbridge and York Capital both said they were taking risk off the table, so maybe this coincides with that, who knows. For those interested, York has disclosed their transaction details of the shares they acquired at the bottom of their 13D filing here. So, we'll definitely have to keep a close eye on this one. This is a brand new equity stake for York because as of March 31st they did not own any SY shares per their most recent 13F filing.

Taken from Google Finance, Sybase is "delivers enterprise software and services to manage, analyze and mobilize information. The Company provides open, cross-platform solutions that deliver information anytime, anywhere, providing decision-ready information to the right people at the right time."

As always, for the latest movements from prominent investment managers, head to our hedge fund portfolio tracking series.