These data were collected during the last phase of the recent bull market, and I was wondering what, if any, differences there would be between M&A data collected in bear markets. To that end, I looked at 36 takeovers collected between the end of June through the end of last December. (I tried to collect every takeover that I saw, but I'm sure my list is probably not complete.) The data is summarized in the table below. (Click to enlarge.)

This is the Third Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here. We've already covered:

• Timothy Barakett's Atticus Capital
• Whitney Tilson's T2 Partners
• Peter Thiel's Clarium Capital
• Bill Ackman's Pershing Square
• Bret Barakett's Tremblant Capital
• John Paulson's Paulson & Co
• David Einhorn's Greenlight Capital
• Dan Loeb's Third Point
• Paul Tudor Jones' Tudor Investment Corp.
• Louis Bacon's Moore Capital Management

Next up is Bruce Kovner's Caxton Associates. The $10 billion firm is one of many global macro oriented funds which we cover. This is a switch from some of the more value oriented funds we've been covering, like the 'Tiger Cub' funds including Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, and Andreas Halvorsen's Viking Global.

Q2 2008 Earnings Call

July 28, 2008 4:30 pm ET

Secure Computing Corporation (SCUR)

Q1 2008 Earnings Call Transcript

While IT budgets are being squeezed, spending on security software and hardware remains strong, Pacific Crest’s Rob Owens asserted in a research note today. He notes that “the vast majority” of companies in the sector met or beat Q1 expectations. And he says checks on the quarter to date finds “continued demand for security solutions,” though he warns of some “air pockets,” in particular for the small-and medium-sized business segment and in the U.S. government sector.

In connection with his larger take on the sector, Owens raised his ratings on both Check Point (CHKP) and Websense (WBSN) to Outperform from Sector Perform.

Secure Computing Corporation (SCUR)

Q4 2007 Earnings Call

February 4, 2008 4:30 pm ET

Goldman Sachs’ software analysts have cut their estimates on a host of companies in response to the weakening economy. In a note Tuesday, the firm said that its U.S. economists believe we have already slipped into recession. They see zero growth in the first quarter, and “slight shrinkage” in Q2 and Q3. In response, Goldman has cut pro forma EPS estimates by 1%-2% on average for many software stocks.

Here’s a rundown on their fiscal 2008 EPS cuts. In most cases Goldman also cut estimates for 2009 as well:

Secure Computing Corp. (SCUR)

Q3 2007 Earnings Call

October 29, 2007 4:30 pm ET

I've been arguing for some time that tech was going to be strong since the subprime meltdown. The main arguments: minimal subprime/credit exposure, major exporters, and minimal consumer exposure. And that thesis has been playing out, with tech being a standout over the last month or so.

Now, however, let's take the other side of this trade for a moment. With Tibco (TIBX)missing Wednesday night, which tech stocks are most exposed to subprime, or at least to the financial services sector, and how have those stocks done since the market trough in mid-August?

Secure is the largest stand-alone computer security company around (or at least, the largest "pure play" on computer security). It was the inventor of the firewall, which was developed for government systems, back when the company was a piece of Honeywell (HON), and its firewall has never been breached. As a result, it got a lot of government business, and a lot of attention from [IT] managers looking to buy stronger security products to protect networks.

It also has related solutions for computer security headaches - including some very strong email spam (with their IronMail product) and malware prevention systems that, from what I can tell, work very well.

The Purest Play in Network Security by Mark Veverka

Summary: The top player in the enterprise firewall market, Secure Computing (SCUR) has good reason to feel secure. With about a 17% share in this segment of the rapidly growing world of network security, the company is seen as a good buy these days. Rivals of all sizes cater to mostly consumer security needs, while Secure serves huge corporate and government clients. Following stellar fourth quarter earnings, shares topped $9 in February, settling back to $8 last week, in reaction to a Sell rating from Goldman Sachs for a seemingly high valuation. Joel Fishbein, Lazard Capital Markets software analyst, is among those who see this as an opportunity. He estimates the company could earn 53 cents a share in 2008, well above the 44 cent consensus estimate. Tireless efforts by hackers are predicted to cause companies to more than double the current 3% to 7% of their IT budget on fending off attacks. Secure Computing provides the solutions; its main firewall product has never been breached, and CEO John McNulty ensures a constant flow of innovative security solutions. The company offers means to not only protect a network itself, but data within the network as well, an appealing feature to huge corporate clients. With over 19,000 customers, bulls think the company can build a durable business that can survive consolidation moves in a fast-growing market.
Related Links: Secure Computing: Weak Government Spending Could Hamper Results • Secure Computing Shares Slide • Secure Computing CEO Buying Stock

But she says that there are indications of weakness in public sector IT spending, which accounts for 16%-17% of the company’s revenue. Friar says weak government spending could result in weaker-than-expected first quarter results.

Friar also notes that the stock trades at a substantial premium to the software group, at 73.6x enterprise value/adjusted free cash flow, versus 19x for the overall software group.

More than that, investors seem enthused about Cisco’s determination to expand its offerings in the security sector.

Bullish calls:

In 2005, McNulty was paid a salary of $377.5K and a bonus of $430.76K, and he was granted options for 162K shares at $9.00. Based on his current holdings, if McNulty exercised all of his options, he would own about a 2.3% stake in SCUR. The company has no stock ownership guidelines.

Background: