While hedge funds were scrambling last week to file their quarterly equity holdings with the Securities and Exchange Commission by the February 17 deadline, a number of hedge funds were busy revising earlier filings.
This is pretty common. Sometimes firms need to correct earlier errors made inadvertently. For example, in its third quarter 13F report, New York–based Casablanca Capital, the activist and event-driven fund firm founded by Donald Drapkin and Douglas Taylor, said it owned 82 million shares of Cliff’s Natural Resources. That would have equated to roughly two thirds of the company’s float. Oops! Several days later, however, the firm filed a revised version that showed it owned $82 million worth of Cliff’s. To quote the famous Saturday Night Live character Emily Litella: “That’s very different.”
Most revisions, however, involve the disclosure of partial or full positions that weren’t previously reported, after a firm got permission from the SEC to hold back on reporting until it finished completing its investment. This also is fairly common.
One firm that regularly delays a handful of holdings is Davidson Kempner Capital Management, the New York–based multistrategy firm founded in 1987 by Marvin Davidson and Thomas Kempner Jr. (Davidson retired in 2009). At the beginning of 2014, the firm managed $22 billion, making it the 18th-largest hedge fund firm in the world.
It is not unusual for the firm to amend as many as seven or eight earlier filings about the time it is submitting its disclosure for the most recent quarter. For example, on February 13 Davidson Kempner not only filed its holdings for year-end, it also filed seven amended documents for earlier periods. Interestingly, four of those seven revised documents were separate amendments for the same period — the September 30, 2014 quarter.
None of the stocks flagged in the newly disclosed earlier positions were contained in the initial September 30 filings, which means the firm did not previously disclose a small stake that was subsequently shown to be larger. Of the newly disclosed old positions, several of them are activist or takeover targets. This suggests that, because Davidson Kempner was buying stocks of companies involved in high-profile activity at the time, the hedge fund firm did not want to reveal its buying activity during the period.
For example, in one of the amended September 30 filings, Davidson Kempner disclosed that it had owned $61 million worth of Dollar General Corp. shares and a small stake in Tim Hortons. In January Dollar General lost its bid to acquire Family Dollar Stores, whose shareholders approved a takeover offer from rival Dollar Tree. Tim Hortons, the doughnut chain, recently merged with Burger King Corp.. Davidson Kempner’s initial 13F for the September 2014 quarter did not contain either holding.
Another amended filing for September 30 contained three previously undisclosed holdings, including a $482 million stake in Covidien, a medical device maker that completed its blockbuster merger with Medtronic in January. On the same day the hedge fund firm disclosed the Covidien stake for the September 30 period, Davidson Kempner revealed in a separate filing that it owned $235 million worth of the stock as of June 30.
In two separate amended filings submitted on February 13, Davidson Kempner also disclosed a $47 million stake in Safeway as of September 30 and a $101 million position in the supermarket giant as of June 30. Earlier this year Safeway completed its merger with Albertsons.
Meanwhile, when Davidson Kempner filed its 13F in November that identified its stock positions as of September 30, the hedge fund firm also disclosed its extensive efforts to hide its position in Hudson City Bancorp, a Paramus, New Jersey–based bank holding company. In late August 2012 Hudson City Bancorp agreed to merge with a subsidiary of M&T Bank Corp. The deal, however, has been held up amid regulatory investigations into money laundering at M&T.
In any case, in November Davidson Kempner finally disclosed that it had been a long-time investor in Hudson City. The firm corrected its December 2012, March 2013 and June 2013 quarterly filings to disclose that it owned 325,000 shares of Hudson City in each of those three periods.
Davidson Kempner also revised its September 2013 filing to show that it built that stake to nearly 4.2 million shares and then revised its December 2013 filing to announce it owned nearly ten million shares of Hudson City. Its revision for the March 2014 period showed that stake was subsequently cut to nearly 5.2 million shares. The hedge fund firm then filed two separate revisions for the June 2014 period.
The moral here: Following the 13F filings sometimes doesn’t provide the opportunity to track the most high-profile positions of some hedge funds.
