Meanwhile, Over At Pirate Capital

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We’ve pretty much flooded the zone with Vega coverage today. But we haven’t forgotten about Pirate Capital, the Norwalk, Connecticut hedge fund run by Tom Hudson that suffered major staff defections last week. DealBreaker’s sources have been scurrying around collecting bits and pieces about what’s going on aboard the Jolly Roger and since it’s Friday and we’re in a sharing mood, we’re happy to show you what we’ve got. (And we’re going to try to keep the piracy puns to a minimum.)
We’re told that the exodus of talent at Pirate was not caused by the SEC investigation, as some initially speculated. It was dissatisfaction with compensation that drove the analysts to jump ship (sorry!), according to a source close to some of the analysts. Apparently the analysts anticipated that their year-end bonuses would be very low due to the fund’s poor performance. Cost cutting at the fund was apparently already underway. We’re told that Hudson stopped the firm-paid lunches and took the drinks out of the company fridge. (Editor’s Note: Is there even anywhere to eat lunch in Norwalk? Oh, of course there is. They’ve got two Wendys, one of them just up Connecticut Avenue from the Pirate ship shop.)
More on Pirate Capital after the jump.


After the analysts walked the plank, Hudson’s shop is seriously undermanned, according to another source.
“First off, there's only one real analyst left at Pirate. The other one was last year's intern (nice guy, but still an intern),” the source said.
Many of the staffers are said to be recent hires with little hedge fund experience. When we called Pirate last week, the woman who the receptionist put through to answer press calls described herself as a “temp” and declined to give her name.
So that’s the staff. What about the investments? Well, on Monday Pirate disclosed it was selling off shares of one of its bigger positions—it’s stake in Walter Industries. We’re also told that the overwhelming majority of the assets under Pirate management are only subject to a three month lock-up, meaning that the fund’s investors could pretty quickly take the air out of the Jolly Roger’s sails. (Okay, sorry. We can’t help it.)
All of this is unconfirmed, of course. Pirate totally won’t return any of our calls, and the temp just keeps saying “No Comment.” Tom, if you're out there, we'd love to chat with you. We'll even spring for lunch!

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