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5yrs ago Hedge Fund hfm.global Views: 399

Canyon Capital Advisors sold more than 36 million shares in Altaba during the third quarter, adding to a hedge fund exodus from the closed-end company containing Yahoo’s remains.

The disclosure came after Sir Christopher Hohn’s TCI Fund Management sold its stake in Altaba, ending a campaign to force the company’s liquidation. TCI owned almost 80 million shares of Altaba worth $5.9 billion at the end of March, when it sent a letter calling for the company to sell its remaining Alibaba and Yahoo Japan shares.

Institutional Investor first reported last month that TCI had sold its stake in Altaba.

Canyon sold the majority of its shares during an Altaba tender in August, a person familiar with the matter said. The firm owned more than 7 million shares worth $480 million at the end of September, down from 43 million shares worth almost $3.2 billion at the end of June. Canyon managed $18.3 billion in hedge funds at midyear.

The exits point to a denouement for one of the most popular hedge fund trades this year. Hedge funds owned more than 41% of Altaba’s shares earlier this year, making it one of the industry’s most crowded stock positions. Several funds paired the trade with a short bet against Alibaba’s stock.

From March to the end of the third quarter, the company’s 10 largest hedge fund shareholders sold more than half of their shares, according to an Absolute Return analysis. Seven of the 10 funds decreased their holdings during that period.

Elliott Management ranked as Altaba’s largest shareholder at the end of the third quarter, holding a position worth $1.7 billion. Elliott declined to comment on its position.

Investors have pushed Altaba to narrow the difference between its share price and the value of its underlying assets, which includes a roughly 15% stake in Alibaba. The trade hinges on Altaba’s ability to sell its Alibaba shares while avoiding repatriation taxes, which were reduced as part of President Donald Trump’s tax reform bill. The company announced in September it had sold the remainder of its Yahoo Japan shares.

Altaba’s share price is down more than 16% this year, trimming gains for funds that profited from a run-up in the company’s stock following its reorganization.

Canyon’s Value Realization Fund was up 1.24% for the year after losing 2.48% in October. The fund is now up about 2.15% for the year after regaining some of the losses, a person familiar with the matter said.

Canyon joins Altaba sellers in third quarter on Absolute Return.


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