Pirate Treasures Turnaround
08/15/06 - 07:01 AM EDT
Matthew Goldstein
One of Pirate's strategies has been to gang up with other activist hedge funds and come after a company's management from all sides.
"I view them as real tag-team activists," says Damien Park, president of Hedge Fund Solutions, which counsels companies on how to deal with activist hedge funds. "You often see them in companies where other activists have accumulated positions." Park notes that Pirate lined up behind Barington Capital in the New York hedge fund's successful proxy battle to win for seats on the board of Pep Boys (PBY Quote - Cramer on PBY - Stock Picks). He adds that Pirate often aligns itself with Warren Lichtenstein's $4 billion Steel Partners activist fund. But Hudson, a former Goldman Sachs vice president and distressed-bond trader, also has demonstrated a willingness to fight his own battles. In a recent letter to OSI Restaurant Partners (OSI Quote - Cramer on OSI - Stock Picks), the operator of the Outback Steakhouse chain and other eateries, Pirate skewered management for "its legacy as an aimless brand aggregator" and its "lost credibility among both investors and Wall Street research firms." Pirate, which owns 3.9 million shares of OSI, is advocating a variety of measures to boost the company's stock price, including a spinoff of some its properties. Hudson also has not been averse to tooting his own horn. At an April conference in New York City for activist hedge fund managers, Pirate handed out baseball caps bearing its name, a skull and cross bones and the slogan "surrender the booty."
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