market folly

Steven Cohen's hedge fund firm SAC Capital just now filed a 13G with the SEC regarding shares of Forest Oil (FST).

As of October 10th, SAC owns 4.8% of Forest Oil with 5,457,851 shares. This marks an increase of 50% in their common stock position size since the end of the second quarter (though it should be pointed out that SAC also owned FST call options at the end of Q2).

Since then, SAC Capital has bought 1,829,850 additional shares of FST. However, in the footnotes of the SEC filing, it notes that SAC owned more than 5% of FST on September 30th. Yet over the past 10 days, their ownership stake has decreased down to 4.8%.

Forest Oil Special Dividend

The September 30th date is important here because Forest Oil executed a special dividend of 70 million shares of Lone Pine Resources (LPR) that are owned by Forest. That distribution was made to FST investors on September 30th and shareholders on record as of September 16th received 0.612 of a share of Lone Pine common stock for every share of FST owned.

In early September we covered how Jeffrey Altman's hedge fund Owl Creek started a Forest Oil stake, presumably playing this dividend catalyst just like SAC. So while these major hedge funds held a sizable position before the special dividend, it will be interesting to see if they will still hold a position going forward.

Per Google Finance, Forest Oil is "an independent oil and gas company engaged in the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids in North America."