« NII Holdings: New Buy Provides Unique Exposure To Emerging Markets Wireless | Main | Rogers Splits and Reports Subscriber Statistics »

January 08, 2007

We Have Good Company In Endeavor

I have to admit that I am flying a little blind on Northlake's long position in Endeavor Acquisition Corporation (EDA), the blank-check company that has agreed to purchase American Apparel. Usually, I like to have an analyst report or two to review before making a new purchase but EDA had no coverage before it announced its acquisition of American Apparel.

So even though I am comfortable with my analysis of EDA, when InsiderScore.com reported that SAC Capital has taken an 8.7% position in EDA, I was quite pleased. SAC is one of the largest and most successful hedge funds in the world. Here is a paragraph that I excerpted from a longer story that appeared when I pulled up a quote on EDA at Yahoo! Finance:

"A "blank-check" company no more, last month, Endeavor agreed to purchase American Apparel Inc. for $244 million. Under the terms of the deal, EDA will pay American Apparel founder and CEO Dov Charney approximately 32.3 million shares of restricted stock, assume $100 million in debt, create a one-time merger bonus pool of $2.5 million, and reserve up to 2.7 million shares of additional common stock to be made available to American Apparel employees. Charney's stock will be locked up for at least three years, and he is expected to buy out an existing American Apparel investor for $60 million. He will also stay on with the company as CEO, and the deal is expected to close sometime this summer (and one would suspect that Endeavor will change its name at that time). On Dec. 29, SAC disclosed holdings of 1,751,550 shares of Endeavor, or an 8.7% stake. The firm's holdings include options for 200,000 shares, and it previously disclosed no holdings in Endeavor. SAC's filing lists Dec. 19 as the triggering date for its filing, the day it surpassed the 5% ownership mark and the same day Endeavor announced the American Apparel acquisition."

I also was buying EDA for clients on Dec. 19 and then again on Dec. 20. Good to know the millions of shares that traded those day were at least partially being purchased by someone with a good track record.

Posted by Steve Birenberg at January 8, 2007 03:43 PM in eda