The 'Leon Black Squeeze' Is The Short Seller Killer's Trademark Move
Leon Black famously said three years ago that his private equity firm Apollo Global Management would be "selling everything that's not nailed down."
According to Forbes' Nathan Vardi, Black is now the "short seller killer of 2016" given his "spending spree," which has "made life particularly painful this year" for hedge funds with a short bias.
Specifically, the private equity firm took part in 11 separate transactions so far in 2016, which generated $11.7 billion in deals. In fact, many of these deals involved companies heavily shorted by hedge funds.
As an example, Black spent $6.9 billion in February to acquire ADT, which happened to be one of the most heavily shorted name within the entire S&P 500 index. The price tag on the deal was $42 per share, marking a 56 percent premium over the stock's closing price immediately before the deal was announced.
Another deal involved Apollo's acquisition of Diamond Resorts International for a 26 percent premium. Similarly, the stock also had a large short interest.
Perhaps the most notable acquisition occurred in July when the firm acquired Outerwall Inc (NASDAQ: OUTR), the owner of Red Box DVD rentals, which also happened to be the third-most shorted stock at 46 percent of its public float.
"Call it the Leon Black squeeze," Vardi wrote while adding, "Short sellers are advised to keep a close eye on Black and Apollo before the year is out."
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