Another sometime-activist hedge fund firm is expanding its war chest.
New York–based Soroban Capital Partners reopened its Soroban Opportunities Fund to new money, according to several people with knowledge of the fund. The firm raised more than $800 million for its offering, which was “way oversubscribed” according to an investor, and then promptly closed the fund again. The firm declined to comment.
As we initially reported more than a year ago, Soroban launched Soroban Opportunities on August 1, 2014, to focus on the firm’s best investment ideas. The firm described the fund in an earlier letter to clients as “an opportunistic, concentrated portfolio.” At that time, Soroban was expecting to raise about $1.5 billion for the fund. As of the end of August 2015, the entire firm managed $8.5 billion.
Soroban Capital was launched in late 2010 with $130 million. It is headed by Eric Mandelblatt and Gaurav Kapadia. In general, Soroban says it takes a global, concentrated, value-driven approach with a core focus on equity long/short investing.
Mandelblatt worked at Goldman Sachs from 1998 through 2005, starting as an equity research analyst in the investment research department, covering natural gas pipeline and distribution companies and master limited partnerships. He became chief operating officer of the firm’s U.S. Principal Strategies business in 2004. Kapadia was previously a partner at TPG-Axon Capital Management, where he spent nearly six years.
Through August the Soroban Opportunities Fund had gained about 5 percent for the year, while Soroban Capital Partners, the firm’s flagship fund, had returned 7.22 percent.
At the end of the third quarter, Soroban had positions in just 24 individual stocks, according to regulatory filings. It also had a roughly equal number of positions in puts and calls of individual stocks.
The firm manages what are known as event-driven funds. Soroban is gaining a reputation as an activist firm, but it more resembles a merger arbitrageur.
However, Soroban generally runs a gross exposure of about 200 percent or more and manages a relatively large short book. Since last year the firm has been steadily reducing its net exposure.
Most of its largest long positions are companies now involved in mergers. For example, its largest single-stock position at the end of the most recent quarter was Time Warner Cable, which is trying to close its merger with rival Charter Communications.
Soroban’s second-largest position was beer giant Anheuser-Busch InBev, which has agreed to merge with SABMiller. Its third-largest position was Precision Castparts Corp., the maker of aerospace and other parts, which is being acquired by Warren Buffett’s Berkshire Hathaway.
Soroban’s fourth-largest position, however, is an activist target: oil pipeline giant Williams Cos. In September, Williams agreed to merge with Energy Transfer Equity in a deal valued at $37.7 billion.
In 2014, Soroban and Keith Meister’s New York–based Corvex Management reached an agreement with Williams in which Mandelblatt was appointed to the board of directors.
Soroban filed its only initial 13D back in February, when the firm said it owned 9.98 percent of California Resources Corp., an oil and gas producer. However, the stock is a very small part of Soroban’s portfolio.
