Farallon Takes Money off the Table in CapitalSource

In an amended 13D filed with the SEC after the close Monday, Thomas Steyer's hedge fund Farallon Capital has updated its stake in Capitalsource (CSE). The filing was made due to activity on September 17th, 2009 and Farallon now shows a 5.7% ownership stake with 18,576,341 shares. This is down from its previous stake as the hedge fund sold 8,084,981 shares (or about 2.5% of its ownership stake) since August 14th of this year.

Farallon is a multi-billion hedge fund founded by Thomas Steyer in 1986. While we don't like to speculate as to why a fund might be selling a particular security, it wouldn't be out of the ordinary for Farallon to solely be locking in some profits here as the stock has enjoyed quite a healthy run. CSE is interesting because as we've noted in the past, fellow prominent hedge fund player Seth Klarman has invested a lot of his Baupost Group's cash into Capitalsource as well. We'll continue to watch Farallon's movement in this name.

In terms of other notable activity, we also saw Farallon update its position in Global Gold (GBGD.OB). Additionally, head over to our post to check out the rest of Farallon's portfolio.

Farallon is a $1.5+ billion hedge fund founded by Thomas Steyer in 1986. It usually invests in equities, private investments, debt, and real estate. While Farallon has a solid track record, 2008 was definitely a chink in the armor. After receiving redemption requests for almost 25% of its main fund's capital, the hedge fund suspended withdrawals. Farallon's poor 2008 also put it on the dreaded list of the top 10 asset losers.

Taken from Google Finance, Capitalsource is "a commercial lender that provides financial products to middle market businesses. Through its wholly owned subsidiary, CapitalSource Bank, the Company provides depository products and services in southern and central California. It operates through three segments. The Commercial Banking segment comprises the Company’s commercial lending and banking business activities. The Healthcare Net Lease segment comprises its direct real estate investment business activities. The Residential Mortgage Investment segment comprises the Company’s remaining residential mortgage investment and other investment activities, in which it formerly engaged to optimize its qualification as a real estate investment trust."

Comments

[foolynaround:]

if you check the farallon/capitalsource history, you will see that at one time farallon was the largest shareholder of capitalsource with over 40 million shares. their average price has to have been in the mid to upper teens. farallon did not purchase any capitalsource stock below the price at which they recently sold. as opposed to "locking in" profits, they have just mitigated some of their losses. i believe in all actuality that steyer has lost his butt on this investment. conversely, seth klarman purchased captialsource stock and bonds much closer to the bottom and his fund is sitting pretty with this stock.

Oct 09 08:08 AM