Hey Kev, When MF Global’s New Shareholders Talk - Pay Attention

Activist hedge fund Jana Partners LLC Thursday disclosed an 8.2 percent stake—almost 10 million shares, or $100 million-worth, more or less—in the stumblin’ and bumblin’ and fumblin’ futures brokerage MF Global Ltd (MF). Putting aside what it delights in characterizing as legacy issues, MF Shippe of Foolles has, since lumbering to a high of $32.20 in late December:

• Lost, in less than entirely transparent circumstances, chief financial officer Amy Butte;
• Conceded a $141.5 million pillaging to a trader who, in late February, exploited a known, and deliberately maintained, flaw in its order entry systems to get seriously upside down on rather more wheat futures contracts than he should; and
• Bungled the imposition of higher margin requirements on its CFD clients in the UK, triggering rumors that MF Shippe of Foolles was once again flirting with icebergs.

On the sort-of positive side, it hired a new CFO—whose own butte had been on the beach since being kicked off the Ameritrade bus, apparently on grounds of being surplus to the requirements of a profitable business, in mid-2007—and caught something that looked suspiciously like a life-line tossed out by its former parent, the UK-based hedge fund manager Man Group plc.

So, a free piece of advice for olde pal of these pixels Kevin Davis, MF Global’s chief executive officer: Do not pull your old

I don’t know who they are. I just do a good job of pretending that I am interested in what they say

act when your new shareholders show up in reception. Jana plays rough and that benign 13G will turn into a 13D missile quicker than you can blow the froth off the ceremonial cappuccino.

Jana Partners founder Barry Rosenstein says sometimes management needs a wake up call to improve the way it is running a business...

...“I think you have instances where you have Sleepy [not to mention Arrogant and Dopey—Ed] management” and sometimes it is necessary to shake-up a firm in order to “reenergize management.”

With any luck, game on.

MF Global Ltd/Jana Partners LLC
SEC Schedule 13G
Apr. 17 2008

Jana’ s activist investing
Thomson Reuters Apr. 11 2008

Earlier on NakedShorts
He’s a pretender (and good at it)
Oct. 24 2007

Disclosure: (Nervously) Long MF. Somewhat comforted by a basis somewhat less than half the price Davis and his acolytes coughed up in a touching, but sadly premature, $3 million display of faith in their own dubious management talents after that little wheat fracas.