* Jason Ader wants to seed activist fund this year
* Ader is also waging proxy battle against slot maker IGT
* Many activist investors making headlines again in 2013
By Katya Wachtel
NEW YORK, Feb 8 Former Wall Street casino
analyst turned investor Jason Ader is stealing a page from the
playbook of billionaire traders Carl Icahn and William Ackman.
The New York-based money manager is trying to boost the
share price of U.S slot machine maker International Game
Technology by agitating for a boardroom shakeup in the
company that an Ader-led fund owns a 3 percent stake in.
It is the first time that Ader, who is waging a proxy battle
to get three of his representatives elected to ITG's board, has
embraced an activist-style of investing.
But it is a strategy the former Bear Stearns gaming analyst
Ader is taking a real shine to outside of managing his own fund.
A hedge fund seeding business that Ader started in 2012 is
considering providing investment capital to one or more hedge
funds that focus mainly on shareholder activism, Ader told
It is a growing indication that the kind of activist
investing pioneered by Carl Icahn, and later embraced by Ackman
and his Pershing Square Capital Management, is coming back into
vogue - even as the two hedge fund managers most identified with
activism are currently engaged in a nasty public feud over
nutritional supplement company Herbalife Ltd.
"The market is overcrowded with funds," said Ader, who also
is a board member of Las Vegas Sands Corp. He said,
activists "are very good at creating their own catalysts on the
For instance, last year Dan Loeb and his Third Point hedge
fund used activism to force management changes at internet
company Yahoo Inc. David Einhorn and his Greenlight
Capital is using activism to push technology giant Apple Inc
to give back more of its cash stockpile to investors.
Icahn, meanwhile, has teamed up with mutual fund
Southeastern Asset Management to win board seats at natural gas
company Chesapeake Energy Corp and help push the
company's controversial chief executive, Aubrey McClendon, into
Ader said activism is gaining favor as an investing strategy
because the prices of so many stocks move in lockstep with each
other these days. Pushing for things like a directional change
at a company, a share buyback or dividend payment increasingly
is being seen as a good way for a manager to differentiate a
stock's performance from the pack.
Some of the top hedge fund performances in 2012 came from
activists like Loeb, whose Third Point Ultra Fund jumped about
35 percent, and Mick McGuire, who saw his Marcato International
fund rise almost 29 percent. On Friday, McGuire's $1.1 billion
Marcato Capital Management took a 5 percent stake in auto parts
maker Lear Corp and said it plans to seek board seats.
The fact that some of the $2 trillion industry's most
prominent activists, from Loeb to Ackman and also Barry
Rosenstein of Jana Partners, posted double-digit returns when
the average hedge fund gained only 6 percent last year, has
attracted the interest in the strategy at some big allocators
like pension funds, some experts said.
Ader's seeding platform, Accelerator Fund Partners is
focusing on new hedge funds with about $100 million or less in
assets. The platform is funded by Ader's firm and a large,
Beverly Hills-based family office, and has committed to
providing $1 billion in seed capital over three years, he said.
In searching for a suitable activist fund to invest in, Ader
said one thing he looks for are new managers that are cognizant
of the potential volatility that activism can create for a
portfolio as the bulls and bears duke it out over a company's
"Hedge fund investors are attracted to the upside generated
by activists, but the lack of volatility management in down
periods has been a cause for some hesitation, or has caused
allocators to invest smaller sums," he said.
Activism also has its limits, which may be one reason it has
gone in and out of favor. While Ackman's Pershing Square had
some success in pushing for changes that boosted the stock
performance of fast-food giant McDonald's Corp, his
attempts to induce structural changes at retail chain Target
Corp went nowhere.
It is not clear how Ader's attempts to press for change at
IGT, a company he knows well from his days analyzing the casino
industry, will pan out.
IGT's stock, trading now at about $16.60, has risen more
than 11 percent since Jan. 4, when IGT told investors it had
received a notice of intent from Ader to nominate four new
members to the board, including the company's former CEO Charles
Mathewson. But during the period, IGT also reported quarterly
earnings, which beat Wall Street analyst expectations.
Ader has since reduced his demands to replacing three of the
company's eight directors. He aims to boost the stock price of
IGT by pushing the company to consider strategic alternatives
for a social gaming unit it bought last year.
"I feel very strongly that all shareholders would benefit
from having more ownership of the company represented on the
board of directors," Ader said, adding he would like to see a
board that has more expertise in casinos. "We would have
preferred to avoid a proxy fight."
IGT has urged shareholders to reject the slate of directors
put forward by Ader. IGT said Mathewson used company money to
fund a lavish lifestyle and had a "decidedly 'old school'
approach to corporate governance, which was driven by his own
IGT's annual meeting is scheduled for March 5 in Las Vegas.