A generally very secretive Tiger Management Corp. scion who has obsessively tried to remain as opaque as possible has seemingly gone activist.
David Gallo, founder of New York–based Valinor Management, on Thursday disclosed in a regulatory filing that his firm has boosted its stake in dELiA’s, the embattled retailer marketed to teen girls, to 18.7 percent. The disclosure of the initial stake was made in a 13G filing, indicating the position was passive; Thursday’s disclosure was made in a 13D filing.
In addition, the hedge fund disclosed that under a purchase agreement, Gallo will nominate Seth Cohen, a Valinor partner, to the company’s board of directors, as well as another individual designated by Valinor who is not an employee of the hedge fund and is approved by dELiA’s chief executive.
This seems to be Gallo’s first activist position since he launched his firm in July 2007. However, a person familiar with the firm says it does not characterize this investment and arrangement as an activist situation.
Whatever your definition is, this is the first time a Valinor representative has secured a seat on a publicly traded company’s board. In the past a Valinor individual has sat on the board of a private company, however.
Gallo can be called a great-grandcub as well as a Tiger Cub. He previously worked at Bridger Capital, founded by Roberto Mignone, who in turn previously worked for Tiger Cub John Griffin’s Blue Ridge Capital, and he also worked at Tiger Management.
Valinor initially disclosed a 9.56 percent stake in dELiA’s in October. It is not clear what attracted the hedge fund to the company. The struggling teen retailer has a market cap of just $73 million after the stock dropped about 10 percent on Thursday morning to slightly above $1 per share.
Back in December 2006 the stock traded above $11. But the stock lost most of its value in 2007, when the company plunged into the red. It has lost money from continuing operations every year since. Valinor is not alone in liking the stock. Leon Cooperman, founder of New York–based Omega Advisors, revealed last fall that he had taken a 6.93 percent stake in dELiA’s for his personal account.
Valinor had $2.9 billion in assets at year-end. We earlier reported that its long-short hedge funds, the Valinor Capital funds, rose 23.4 percent in 2013. The funds typically aim for a net exposure of between 30 percent and 60 percent, according to regulatory filings. The firm also runs a strategy offered as the Valinor Credit funds.
At year-end, Valinor’s five largest holdings were FleetCor Technologies, a provider of fuel cards and other workforce payment products and services to businesses; Hertz Global Holdings, the car rental giant; Popular, a Puerto Rican bank; Cheniere Energy, which specializes in liquefied natural gas (LNG)–related businesses; and Pentair, a maker of water filters and pumps. Valinor’s largest new positions were in Autodesk, which makes 3-D design software, and Apple, which of course is the maker of the iPad and the iPhone.
