D.E. Shaw's (Very) Good Timing - NYTimes.com

When Alliance Data Systems announced Friday that it was dropping its lawsuit against the Blackstone Group, many shareholders surely leaped for joy as the company’s stock jumped 6.9 percent. But perhaps chief among the beneficiaries of the news was D.E. Shaw, which made an extremely timely investment, PE Hub’s Dan Primack points out.
How good was the giant hedge fund’s timing? On Thursday — one day before Alliance Data made its announcement — D.E. Shaw disclosed in a regulatory filing that it had acquired a 6.6 percent stake in the credit card processor.
In its filing, D.E. Shaw said that its 5.16-million-share stake broke down as follows:

• 2.64 million shares purchased through D.E. Shaw Valence Portfolios
• 38,900 shares that could be acquired by exercising call options
• 2.49 million shares bought through D.E. Shaw Oculus Portfolios
• 100 shares acquired by D.E. Shaw Investment Management

As Mr. Primack notes, the hedge fund bought its shares at an especially rocky time. Alliance Data had sued Blackstone to complete its $6.4 billion buyout only a little more than a week before. Leo Strine of Delaware’s Court of Chancery appeared less than impressed with Alliance Data’s arguments at a preliminary hearing.
And the day before the settlement — the day that D.E. Shaw disclosed its stake — the company’s shares closed at $51.46. In fact, Alliance Data’s shares hadn’t closed above $54 since Jan. 28.