Daniel Plants' Voce Fund Returns 5% as Other Activist Investors Struggle

Daniel Plants' activist fund Voce Capital Management appreciated 5.2% in 2015, beating out the S&P 500 (SPY) and Russell 2000 (IWM) and a whole host of much larger activist investors.

And while the overall returns aren't stellar, the results, described in a Voce letter to investors obtained by The Deal, come in an environment where many of the largest and best-known activist fund managers including Pershing Square Capital Management's Bill Ackman and Third Point's Dan Loeb had off years while others, like insurgent Orange Capital's Daniel Lewis, closed up shop altogether. (Pershing's 2015 performance was a negative 20.5%, net of all fees, while Third Point was down 1.4% for the year).

Voce has engaged in a number of activist campaigns during its five-year existence, growing from less than $10 million in assets in 2011 to more than $100 million in 2015. According to Voce's letter, the fund made money both with long and short positions in 2015 as well as with active and passive investments -- though the fund was "far more profitable" in 2015 on the passive side.

However, activism has driven returns over the longer term. Voce, based in San Francisco, has had a net return of 10.3% over five years, with 8.4% returns in 2014 and a blockbuster 32% return year in 2013 on the heels of its activist investments in Obagi Medical Products and Solta Medical. Both companies sold to Valeant Pharmaceuticals (VRX) for significant premiums, helping to drive returns.

For 2016, Plants left open the possibility that he could ratchet up his activist campaigns at existing insurgent situations by noting that "a number of activist investments initiated in 2015 remain ongoing and therefore their final curtain has yet to fall." One of those could ramp up into high gear imminently.

Throughout the year, Voce had a total of 23 long investments, eight of which were new in 2015, as well as 13 short investments, three of which were new, according to the letter. However, the fund ended 2015 with 12 long positions, according to securities filings.

One of Plants' most active campaigns in 2015 involved Investment Technology (ITG) , a research broker firm that struck a settlement with Voce and partner Philadelphia Financial in April to install a dissident director candidate, former E*Trade Financial (ETFC) president Jarret Lilien, to its board. The company also agreed to begin a search to appoint a second director who would be identified with the investor group's input.

In August, ITG agreed to settle Securities and Exchange Commission charges that it operated a secret trading desk and misused confidential trading information.

The company's CEO and general counsel were terminated and the activists' nominee, Lilien, became interim chief executive. By November, ITG had followed through on one of the activists' demands by selling its sell-side energy research business for $121 million. Throughout all the reshuffling, ITG did not seek the activists' input to find a mutually agreed-upon board candidate by a Feb. 12 deadline as required by the April settlement. That suggests Voce and Philadelphia Financial might seek to launch a director election contest by a March 13 deadline to nominate directors for ITG's 2016 annual meeting.

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