Active Alpha – Insider Buying for April 1, 2020

Here is the latest update on insider buying and activist actions by alternative asset firms.

As stock prices were falling once again on Tuesday, we saw more reports of activist investors and private equity funds taking positions in stocks with the intent of influencing management to take steps to improve the stock price.

In some cases, activists may push for the sale of the entire company and a high price to unlock shareholder value.

Insider Buying By Blackstone

Private equity leader Blackstone (NYSE:BX) filed a 13d announcing that they had acquired a 5.6% position in the shares of NewLink Genetics Corporation (NASDAQ: NLNK), a late-stage, biopharmaceutical company focused on discovering, developing, and commercializing novel immunotherapeutic products to improve cancer treatment options for patients and physicians.

Blackstone acquired the shares as a result of their ownership of a convertible preferred stock they owned in Lumos corporation. Immediately prior to the closing of the merger, Blackstone converted its 2,345,009 shares of Series B Preferred Stock of Lumos into468,145 shares of common stock of NewLink Genetics Corporation.

No specific mention any action on the part of management was expressed by Blackstone in the filing, but they did insert the usual language abut communicating with the board and management to discuss the business and plans for unlocking shareholder value.

Private Placement

Geneva-based RPC Pharma revealed that in a private placement, it purchased an additional 150,000 ADSs and was issued 75,000 warrant ADSs of Akari Therapeutics Sponsored ADRs. RPC now owns 832,477,100, or 28.1% of the biotech company.

Akari focuses on the discovery and development of non-surgical gene therapy products for the treatment of cardiovascular diseases.

No suggestions were made in the filing.

Relative Value Partners’ 13D

Hedge fund Relative Value Partners filed a 13d announcing they had changed their 32% ownership of Western Asset Floating rate Strategic Fund (GFY) from passive to active. With the fixed income fund trading at a 12.9% discount to Net Asset Value.

While boilerplate language was used to describe the hedge funds, intent Relative Value has leaned on closed-end funds in the past to take measures to reduce the discount such as buybacks, tender offers, and even the liquidation of the fund.

The fund invests in variable-rate instruments of US and non-U.S. issuers, including US and non-U.S. investment grade and high yield debt, senior loans, emerging markets debt, and derivatives related to these securities. The portfolio right now invested in US Markets with high exposure to securitized instruments and corporate bonds with an average maturity of 4.1 years.

The discount to net asset value is currently 49% higher than the five-year average due to market volatility.

I expect Relative value Partners with the bord of the closed-end fund soon about narrowing the price closer to the net asset value.

By: Tim Melvin

Related: Blackstone Group May Employ Hostile Takeover with Unizo Holdings

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