Farallon Reduces CapitalSource Stake, Clarifies Corporate Succession

Nov. 3.09 | About: CapitalSource, Inc. (CSE)

Due to activity on October 14th, 2009, Thomas Steyer's hedge fund Farallon Capital Management filed an amended 13D on Capitalsource (NYSE:CSE). Farallon is now showing a 3.9% ownership stake in the company with 12,582,795 shares, which is a decrease from its previous holdings. (As we covered in Farallon's previous filings with the SEC, the fund has been selling CSE shares).

Back in late September Farallon owned a 5.7% ownership stake and obviously has since reduced its holdings down to its current 3.9% stake by selling 5,993,546 shares over the past month or so. You can view the rest of Farallon's holdings here, but keep in mind that the hedge fund is set to update its disclosures here in the next few weeks with a new 13F filing.

We also got some news recently out of Farallon as it pertains to its future. The fund plans to make co-managing partner Andrew Spokes its 'key man' going forward, enabling a succession plan should Steyer ever depart (he has no plans to leave at this point). If both Steyer and Spokes were to leave, then the funds would be liquidated, giving investors complete transparency as to the firm's operating procedures going forward. Spokes previously was an executive director at Goldman Sachs and oversaw portfolio management for Noonday Global Management, a Farallon affiliate.

Farallon is a multi-billion dollar hedge fund founded by Thomas Steyer in 1986 that typically invests in equities, private investments, debt, and real estate. While it 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, Farallon suspended withdrawals. Its poor 2008 also landed it on the dreaded list of the top 10 asset losers. Read more about Farallon in our post covering its background and positions.


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."