Things, making money-wise, have not been going so well at Tom Hudson's Pirate Capital for a while now, but we assumed that the addition of Michael Bolton's daughters, Isa and Holly Bolotin, to payroll as girlfriends and fund managers would straighten things out. When Isa left to join Silver Point Capital in December, we were slightly nervous but held it together, confident that Holly's masterful stewardship of assets would be enough. Then Hudson got a new lady who soon became his fiance and somewhere along the line the last remaining Bolton offspring got pushed out and now all hell has broken loose:
From: [redacted]
To: tips at dealbreaker dot com
Subject: Pirates abandon ship??
Your favorite Pirates seem to be moving out of Norwalk. Put up a sign in the lobby cafe of their building selling their chairs for $500.00 and seem to be moving other desks out of the office today..
I’m having just as good a time as the next guy writing about fucking hookers but let’s take a quick break from that and talk about love—Pirate Capital founder Tom Hudson is getting married. The lucky lady is Virginia Zampella, who Hudson met on SugarDaddyForMe.com. As girlfriends of the pirate are wont to do, Zampella has unofficially appointed herself office manager, with T-bone’s approval.
Allegedly, her first order of business was to get rid of all the women who worked there prior to her being hired/engaged. Next: turn things around at the floundering, 15-large AUM hedge fund. Now, I know what you must be asking yourselves—where does Zampella get off thinking she can “get things back on track” at Pirate, which is what she’s supposedly telling people she plans to do? The answer lies in her prior work experience, which maybe includes being employed as a call girl in New York and Charlotte, and starring in a few adult films. If anything, Virginia runs the risk of classing/smartening the place up a bit too much for the ragtag crew of scallywags, buggerers and alpha destroyers. What’s more, the future Mrs. Hudson #4 has a criminal record (mugshot TK). What I’m getting at is that she’d be probably be more comfortable at a place like GSAM. I’ll make some calls.
We often stay up nights wondering if our billionaire fundy friends are secretly hemorrhaging money, seconds away from being forced to shutter it up and call it a day. So it's nice when we can, for instance, check Third Point off the list. Founder Dan Loeb finally closed on his $45 million, 10,674 square foot penthouse at 15 Central Park West, paid for in cash. We take that to mean things are fine, for now. Joy! We'll sleep a little better tonight, except for that nagging feeling that Pirate Capital's Jolly Roger is headed into a shit storm, a sense we get not from any sort of P&L intel, per se, but because sources tell us Tom Hudson is three months behind with rent on his mausoleum.*
*The "powers" that be around here want me to tell you that I'm just kidding about the delinquent payments. We're sure Tom has all his affairs in order.
We’ve been writing a lot about NYC Pocket Change’s upcoming speed dating event, for “rich old women and hot young men” i.e. the greatest spectator sport of all time (Thursday!) and although many of you are all for being made kept boys, there remain a few who are uncomfortable with the shift in gender dynamics. Obviously I’m talking about Pirate Capital manager Tom Hudson and obviously I’m referring to his profile on SugarDaddyForMe.com, which purports to be “The Real Sugar Daddy Website.” It was recently forwarded our way and though we like to be skeptical about this sort of stuff after having been burned by the fake James Simons listing on CollarMe.com, nothing about the profile seems so outlandish as to have been made up by one of Hudson’s many, many disgruntled former employees. The part about his income being “more than $1,000,000” seems to be a bit of an exaggeration, considering that his flagship fund is currently managing about five bucks, to say nothing of all the dinero he sunk into printing up those proxy battle t-shirts, but I’m sure everyone rounds up on these things. Anywho.
The 6’1, 42 year-old Caucasian is looking for a 25-32 year-old cupcake with a “sense of humor” and “a brain” (not sure if that’s slang for waxed nether regions, I’ve heard it is). You must live in New York or being willing to relocate. You also “must be white.” No brown sugar for this sugar daddy. “Refined” only, thank you very much.
You might wonder if we have a problem with the racist overtones contained in Tom's profile. We don't. If that's his thing, well, that's his thing. What we have a problem with is the fact that the existence of this listing is more or less proof that Hudson couldn't make it work with Isa Bolotin, or sister Holly. And if the scions of soft rock can't make it work with this guy, it's probably a good indication that no one can (though Blarney will certainly try). And that's a shame on par with Pirate seeing about five units* worth of redemptions, because he already built that huge mausoleum, and if the slot for "dead wife" goes unfilled, well, that's just embarrassing.
Nevertheless, we're not giving up hope yet. In fact, we encourage the young ladies to give him a call on his direct line (203-890-2000). Other pertinent info, after the jump.
Unfortunately it looks one of Bess' favorite combinations - Pirate Capital and Michael Bolton - has come to and end. Isa Bolotin is going to Silver Point Capital in Greenwich.
Luckily, Bolton Daughter #2, Holly, is still on the ship's payroll, though for what, we're not sure. Still, Isa's departure is obviously a significant loss, inflicting wounds on our souls that only soft rock ballads can (attempt) to heal.
It’s common knowledge that Tom Hudson has pretty much run Pirate Capital into the ground, by allowing Michael Bolton’s daughters to construct all discounted cash flow models, structure all pair trades and calculate the firm's daily alpha. You knew that, we knew that, the employees at the Local PetSmart, who work on commission and had come to expect a minimum buy/day of whatever a truckload of minnows costs from Hudson knew that. Fucking Michael Bolton knew that. The one person who didn’t know that, or wouldn’t admit it to investors (“We’re having a great year!" "Don’t buy the hype!" "I’ve got a great pick called SMD that’s going to make us all rich!” he wrote last month) was Tom Hudson. Brother was in serious denial and was getting hard to watch. No longer.
In September 2006, Pirate Capital was managing $1.802 billion. Today? Less than $400 million. September 2006? Interns were given the special assignment to go down the road to buy minnows for bigger fish to devour to the leering delight of a staff busy not executing profitable trades. Today? Tom Hudson is forced to make his own trips to PetSmart. You could blame the changes in AUM and aquatic life responsibilities on simply a run of bad luck, or recent market turbulence, but the story we’re hearing (from, yes, a maybe unreliable source) sounds slightly more plausible, if you know how Tom Hudson feels about soft rock ballads.
Apparently Isa Bolotin isn’t the only offspring of Michael Bolton neé Bolotin working at Pirate (in the increasingly irrelevant role of director of investor relations). Bolton’s other daughter, Holly, is currently on payroll as personal assistant to Hudson, which, according to some people, carries the responsibility of making decisions regarding workforce cutbacks. Supposedly, the Pirate staff, which is now down to five, let go of three employees this week (without severance, natch) because Holly told big T to get rid of them, on suspicion that (and this is almost better than the Michael Bolton connection) they posted incriminating comments about her on a Wall Street tabloid. (To her credit, Holly only thought it was one of them, but all three were terminated to be sure all bases were covered.) If you believe that, then you’ll also believe the broader allegation from our source that Hudson “blindly does whatever the Bolotin girls tell him to do, and will be able to blame them when he’s forced to shutter the fund.” Pirate Capital would not confirm or deny any part of the story, because they would not permit us to ask any questions. Their phones are apparently programmed to hang up, after a hand is placed over the receiver and whispers are exchanged, when the word “dealbreaker” is mentioned. Twice.
Congratulations to Tom Hudson, whose hedge fund ended its proxy battle with Angelica, a healthcare linens company, after Angelica kowtowed to the Jolly Rogers’ demand to explore a possible sale. In July, the Pirate team, which owns approximately 9.8 percent of Angelica, told the firm to put itself on the block or prepare to go to war, and nominated two of its own to the board. Angelica stated yesterday that has given its financial adviser Morgan Joseph* the green light to pursue a sale. Hudson then withdrew his nominees for the board, based on the assumption that Morgan Joseph will have time to work on a deal, what with inner-office bitching between associates and analysts taking up a large portion of the day.
Though a previous proxy fight with energy company Aquila saw Pirate distributing buttons and t-shirts, circumstances of late, including but not limited to managed assets falling to $375 million from last year’s $1.802 billion, rendered the free-gift with purchase deal too costly. Why nobody thought to offer burned copies of Michael Bolton’s greatest hits is beyond us. Hindsight.
The monthly was written by a junior analyst name Tassos. Isa Bolotin, Director of Investor Relations, is too busy managing her volatile relationship with Tom Hudson. Hudson is too busy planning the $1mm mausoleum for his clan.
Funny Pirate's only treasure of the month was generated by the most senior analyst that left the firm in early Sept. Who else do they have to put new names on the books? No one. Notice that Pirate's shipwrecks in August is basically its entire portfolio as Pirate sold out of every position except for the four names (BCO, PBY, AGL, and ADG). Can't wait to see the upcoming "Confidential Report."
I highly doubt Pirate has cash to deploy. Its top 4 holdings total about $270mm. According to the AUM as of Sept 07, Pirate listed $374mm. I bet they have over $100mm in redemptions at the end off September.
First of all, we don’t know actually know if there’s anything impure going on between Pirate Captain Tom Hudson and Michael Bolton’s daughter, Isa Bolotin. It would represent a grave error on both their parts—for Isa, because the guy’s two bad bets away from sleeping on her couch and being asked, “Have you moved from that position when I left this morning?”, for Tom, because "Can I Touch You There" takes on entirely new meaning when the person inquiring is your girlfriend's father.
What we do know is that the Jolly Roger’s two activist funds, Activist Fund LP and Activist Fund LTD were both down -6.43% in August, -24.39% /-22.84% August YTD, and -16.17%/-14.65% since inception. And that in September 2006, Pirate was managing $1.802 billion. September 2007? $375 million. If those numbers don’t say “Let me get back to you on those redemption requests, I'm getting a BJ from the investor relations woman right now,” we don’t know what does. (In which case, good for them. Shame about those losses, though.)
Tom Hudson's Pirate Capital is kinda-sorta denying reports that it's assets are down almost 80 percent in the past year. He describes the reports from "various media" as "grossly misleading."
But are they? Pirate Capital's assets are way, way down. Here's Tom's full statement:
Various media have published grossly misleading information regarding results at funds managed by Pirate Capital. Some reports have suggested that Pirate funds lost almost 80 percent of their value in the past year. In fact, while assets under management have decreased, average returns over Pirate's four funds during the last year are about plus 4 percent.
Pirate Capital remains committed to its event-driven strategy to create value for its investors.
Two things. First: what the hell does that mean? As best we can tell, Tom means that Pirate's assets have diminished due to investor redemptions rather than just losses in the funds.
Second: that "average returns" business is pretty dodgy. There are lots of ways to calculate an average and there's no way to tell which method Tom is using here. The "average returns" over Pirate's four funds only matter to investors who are in all four funds. If you're in just one, it doesn't really help that the average returns are sailing in calm seas. You're already off to blackout island if you're in one of the two activist funds. Goldman Sachs has positive average returns but that hardly helps investors in Global Alpha.
No one is getting off the Jolly Roger alive. Bloomberg is reporting that Tom Hudson’s Pirate Capital is shanghaiing investors, forcing them to remain on board its two Jolly Roger Activist funds by halting redemptions. The firm’s assets have declined by almost 80 percent in the past year, according to Bloomberg.
Pirate has said that the four stocks held by the funds are special investments—which, as best we can tell, means that Pirate isn’t willing to sell them immediately to meet redemption requests. The two funds, which are not even two years old, have declined from $150 million to $100 million since they were launched.
So what are the special investments?
“Hudson's letter didn't identify the four stocks held by the activist funds. Pirate's biggest holdings as of June 30 were armored carmaker Brink's Co.; auto-parts retailer Pep Boys-Manny, Moe & Jack; U.S. energy supplier Aquila Inc; and Angelica Corp., a provider of laundry and textile-rental services,” Bloomberg reports.
All is not lost for the Pirates however. They may not have much left in terms of assets. But they still have that special thing called “hope.” Bloomberg notes that while Pirate will continue to charge its 2 percent management fee, it “won’t collect its 20 percent cut of any profits until after until the positions are no longer deemed special investments.”
Our resident Pirate mole informs us that Tom Hudson has suspended redemptions following a 4% decline in August, and let two of his last remaining employees go (apparently “his best analyst” and “his”—apparently only—“trader”). This probably has little to do with the current state of the market, and is more so symptomatic of what happens when your hedge fund is run by a guy who spends his days printing up free t-shirts (in place of persuasive arguments) to give out during proxy battles, and dispatches interns to a PetSmart to buy minnows for bigger fish to devour in front of a staff busy not executing trades. On the bright side, Michael Bolton’s progeny is still with the firm.
With a recent bout of genius investors pulling out of Tom Hudson’s fund, Pirate Capital is down to $400 million in assets, from nearly $2 billion in 2006. London-based GAM pulled $300 million from the sinking ship last month, Naked Shorts reports, and was in good company with a bunch of smaller investors taking their money and running from a fund that employs Michael’s Bolton’s daughter in the increasingly irrelevant role of “investor relations.” Hedge Fund Alert speculated that GAM was troubled by “its size relative to Pirate’s capital base,” while Naked Shorts believes the pull-out had more to do with ideological differences between a “highly-regarded investor” and a low-rent circus clown partial to selling t-shirts out of the back of his car ship.
DealBreaker is not only a place for Wall Street gossip and a source for service journalism, but also a safe space in which readers should feel free to vent. If you have anything you want to get off your chest, we encourage you to go to your safe place (the comments section, our inbox), meet your animal guide (your keyboard), and tell us all about it. Like one loyal Dealbreaketeer who had some feelings about his time working for Tom Hudson that he needed to express.
We’re hearing that Tom Hudson—last seen “dispatching interns to a PetSmart store a half mile down the road [from his office] to buy minnows for his fish to devour, to the leering delight of his staff” and doling out proxy swag—is looking for a new crew to swab his deck. An anonymous source close to Pirate Capital tells us that Hudson is “looking for new investors in order to get the full tax benefit. Since he blew up his entire marketing staff (well, his entire staff in reality), he’ll be using two Investor Relations personnel (one of whom is Isa Bolotin), and a former intern. Looks like Tom Hudson finally got back to his roots after blowing out half his portfolio and producing zero returns for the year.” And also, on a personal note, blacklisting DealBreaker from receiving those super cool t-shirts (we have hard evidence, inquire within).
Hear anything? You know where to findus. And here’s a free one, just because we like the look of your face: Hudson’s gal-pal, Ms. Bolotin, is the offspring of none other than Mr. Michael Bolton. Who was born Michael Bolotin. Who may or may not have money invested in Pirate. Who can be seen here, singing and screwing up the National Anthem.
Tom Hudson’s Pirate Capital continues to blaze ahead with the best proxy fight innovation since the poison pill was invented—proxy swag! Today they’re offering Aquilla, Inc. shareholders pins featuring the face of Aquila chief executive Rick Green. Using a specially designed website called Bad Acquila Deal The Pirates have been leveling cannon fire against Aquila’s plan to sell itself to Great Plains Energy, arrrrhg-uing (sorry) that the sale price is too low and the process flawed.
If Henry Blodget’s been Googling himself lately, he’s probably pretty pleased with the results: the “I own this town” picture to your left is the second thing that comes up when you search for images of the old rapscallion. If Henry Blodget’s been Googling Jim Cramer lately—and let’s be honest: that’s the more likely scenario—he’s probably very pleased with the results: some unhappy cult members are calling for Cramer's head.
On March 28 JC told viewers to sell shares of Dendreon, a biotechnology company in Seattle, a call that “turned out to be dead wrong.” The stock price has tripled since the day after Cramer’s recommendation (closing Thursday at $18.05.)
SEC filings make the best of us feel like we’ve been hit by a tranquilizer gun, which is why we don’t read them, and don’t like them read in our presence. Luckily, some of our friends are in constant need of a good excuse for why they were found passed out at their desks for the eighth (ninth, tenth, twentieth) time this month, and sent over this code red news: the free Pirate Capital t-shirts are SOLD OUT!!! In an SEC filing from today, Pirate Capital informed the gov that they’d changed amended some stuff on the site and that—like they and we had warned on Friday—Café Press would be sending out shirts to the first 2,000 people to sign up and the first 2,000 people to sign up only! (Actually, they’d originally said 1,000 but apparently Tommy-boy was feeling generous.) Never mind the fact that Pi-Cap had some homonym difficulties that were too great to solve before the filing was sent out—they’re not perfect and neither are you. You just need to focus on this: how you’re going to pry Carney’s hands off of one of the 50+ we had sent to the DB HQ.
In Carney’s haste to provide you with real news, re: Pirate Capital’s opposition to the sale of Aquila to Great Plains Energy, he failed to mention the most important part. Luckily, Commenter AJ did: FREE T-SHIRTS. Obviously these bad boys aren’t as chic as the DILF t-shirts we’ll be rolling out soon but they’re still pretty amazing and have a leg up on is in regards to the fact that they’re available NOW. Actually, only the first 1,000 people to sign up will be able to wear what Tom Hudson wears with pride, so act now. It goes without saying that we’ve already signed ourselves up but perhaps not without saying that we’ve also arranged to have one sent to Phillip Goldstein.
Two unrelated hedge fund shareholder activism stories are making headlines today.
Let’s first take the story of the hedge fund reacting against a pending sale of gas and electric utility company Aquila Inc because it involves two of our favorite things: Pirate Capital and the internets. In a first for Tom Hudson’s Pirate Capital, the Jolly Rogerites yesterday launched a website dedicated to opposing the sale of Aquila to Great Plains Energy.
“A Bad Deal for Aquila, Inc. Shareholders” argues that the auction process was flawed and that Aquila is worth more Great Plains has agreed to pay. There’s not really that much to the website right now—a brief introduction, a downloadable presentation in pdf format and contact numbers. But the layout, despite its Web 1996 aspects, is at least entertaining: pirate scrolls, compass watermarks and that fog-hidden pirate ship to the left.
The wags at FT Alphaville point out this is the second time a hedge fund has set-up a website as a shareholder activist tool. They wonder how long it will be till we start seeing hedge fund’s putting up MySpace pages.
So far it’s not clear that the Pirate website is having any effect on the trasaction.
We’ve been writing a lot about NYC Pocket Change’s upcoming speed dating event, for “rich old women and hot young men” i.e. the greatest spectator sport of all time (Thursday!) and although many of you are all for being made kept boys, there remain a few who are uncomfortable with the shift in gender dynamics. Obviously I’m talking about Pirate Capital manager Tom Hudson and obviously I’m referring to his profile on SugarDaddyForMe.com, which purports to be “The Real Sugar Daddy Website.” It was recently forwarded our way and though we like to be skeptical about this sort of stuff after having been burned by the fake James Simons listing on CollarMe.com, nothing about the profile seems so outlandish as to have been made up by one of Hudson’s many, many disgruntled former employees. The part about his income being “more than $1,000,000” seems to be a bit of an exaggeration, considering that his flagship fund is currently managing about five bucks, to say nothing of all the dinero he sunk into printing up those 
No one is getting off the Jolly Roger alive. Bloomberg is reporting that Tom Hudson’s Pirate Capital is shanghaiing investors, forcing them to remain on board its two Jolly Roger Activist funds by halting redemptions. The firm’s assets have declined by almost 80 percent in the past year, according to Bloomberg.
Our resident Pirate mole informs us that Tom Hudson has suspended redemptions following a 4% decline in August, and let two of his last remaining employees go (apparently “his best analyst” and “his”—apparently only—“trader”). This probably has little to do with the current state of the market, and is more so symptomatic of what happens when your hedge fund is run by a guy who spends his days printing up 
With a recent bout of genius investors pulling out of Tom Hudson’s fund, Pirate Capital is down to $400 million in assets, from nearly $2 billion in 2006. London-based GAM pulled $300 million from the sinking ship last month, Naked Shorts reports, and was in good company with a bunch of smaller investors taking their money and running from a fund that employs 
DealBreaker is not only a place for Wall Street gossip and a source for service journalism, but also a safe space in which readers should feel free to vent. If you have anything you want to get off your chest, we encourage you to go to your safe place (the comments section, our inbox), meet your animal guide (your keyboard), and tell us all about it. Like one loyal Dealbreaketeer who had some feelings about his time working for Tom Hudson that he needed to express.
We’re hearing that Tom Hudson—last seen “dispatching interns to a PetSmart store a half mile down the road [from his office] to buy minnows for his fish to devour, to the leering delight of his staff” and doling out 
Tom Hudson’s Pirate Capital continues to blaze ahead with the best proxy fight innovation since the poison pill was invented—proxy swag! Today they’re offering Aquilla, Inc. shareholders pins featuring the face of Aquila chief executive Rick Green. Using a specially designed website called Bad Acquila Deal The Pirates have been leveling cannon fire against Aquila’s plan to sell itself to Great Plains Energy, arrrrhg-uing (sorry) that the sale price is too low and the process flawed.
If Henry Blodget’s been Googling himself lately, he’s probably pretty pleased with the results: the “I own this town” picture to your left is the second thing that comes up when you search for images of the old rapscallion. If Henry Blodget’s been Googling Jim Cramer lately—and let’s be honest: that’s the more likely scenario—he’s probably very pleased with the results: some unhappy cult members are calling for Cramer's head.
Two unrelated hedge fund shareholder activism stories are making headlines today. 