Mudrick Capital Management

Mudrick Capital Management is an investment firm specializing in special situations and event driven investing.[2] The firm was founded by Jason Mudrick, its current Chief Investment Officer, in 2009.[3] The firm is located in New York City and, as of February 2021, managed approximately $3.5 billion in assets.[1][4]

Mudrick Capital Management
TypeLimited Partnership
IndustryPrivate equity, Special situations
Founded2009
FoundersJason Mudrick
HeadquartersNew York, New York
ProductsPrivate equity funds, Hedge funds
Total assets$3.5 billion[1]
Websitewww.mudrickcapital.com

Mudrick Capital typically seeks an event, such as a balance sheet restructuring, a spin-off of assets or the modification of a corporate strategy, that can allow it to capture an undervaluation spread.[5]

HistoryEdit

In 2016, Mudrick Capital’s Distressed Opportunity Fund ranked 1st on Bloomberg’s 100 top-performing large hedge funds with a 38.7% return that year.[6]

In September 2017, the firm converted its 15.3% stake in Verso Corporation, a paper milling company, into an activist holding, citing frustration with the board’s inaction to address the company’s poor performance.[7] In response, Verso announced its board had formed a strategic alternatives committee as well as the resignation of its chairman Rob Amen. Mudrick Capital then switched its stake back to passive.[8]

In May 2018, Mudrick Capital filed a lawsuit against satellite communications company Globalstar, where Mudrick is the largest outside investor, with a 5.6 percent stake, over its proposed merger with FiberLight LLC, stating that the terms of the deal were overvalued at $1.65 billion.[9][10] That deal was called off by Globalstar in August 2018.[11]

In September 2018, Mudrick Capital and HG Vora Capital Management LLC managed an outbidding for Pebblebrook Hotel Trust to acquire LaSalle Hotel Properties for $5.2 billion instead of the $4.8 billion all-cash deal by Blackstone Group LP.[12]

Mudrick Capital was one of the top performing hedge funds in 2019 with an annual gain of 28.8 percent, compared with the average hedge fund, which was up 11.4 per cent.[13] Much of the fund’s success that year was the result of its 51 percent ownership interest in NJOY, which it had purchased in 2017, when the company was on the brink of bankruptcy. By 2017 the company’s sales were up by over 1,100 percent year-on-year.[14]

In January 2021, Mudrick Capital posted gains of $200 million, or 9.8 percent, most of which came from debt and equity options of AMC Entertainment Holdings, Inc. The previous month Mudrick had provided AMC $100 million in new financing in exchange for bonds and 8 million shares.[1] Furthermore, Mudrick exchanged $100 million of AMC bonds due in 2026 for close to 14 million additional shares.[15] The stock then soared in January due to retail investors rallying on the internet forum Reddit.[16] According to Reuters, Mudrick Capital was seen as a hero by the retail investors because the firm did not short sell AMC’s stock, but rather helped rescue the company through clever financing.[17]

Also in January 2021, Mudrick took over a credit hedge fund previously owned by CVC Credit Partners, further expanding the firm’s European presence.

In April 2021, Mudrick Capital Acquisition Corporation II, a publicly-traded special purpose acquisition company (SPAC), announced an agreement with Topps by which the trading card company would become a public company. Michael Eisner's firm The Tornante Company will roll its stake into the new company while Mudrick Capital will lead an additional investment of $250 million. The deal values Topps at $1.3 billion.[18] On April 28th 2021, Topps issued their first NFT ever in partnership with 2021 1st overall NFL draft pick, Trevor Lawrence. The 6 piece collection sold for 225,000 USD on mintable.com.[19]

FundsEdit

Since its inception in 2009, Mudrick Capital has raised several funds to invest in special situations:

  • Mudrick Distressed Opportunity Fund
  • Mudrick Distressed Opportunity Drawdown Fund
  • Mudrick Distressed Opportunity Specialty Fund
  • Mudrick Distressed Energy Co-Investment Fund
  • Mudrick Distressed Senior Secured Fund Global
  • Mudrick Distressed Opportunity Fund II
  • Mudrick Distressed Opportunity Fund II Supplemental Capital
  • Verto Direct Opportunity
  • Verto Direct Opportunity II[20]

ReferencesEdit

  1. ^ a b c Katherine Burton and Katherine Doherty, "Mudrick Capital Gains $200 Million on AMC, GameStop Bets," Bloomberg, February 2, 2021.
  2. ^ "Investors at Fortress, Mudrick, Canyon, and Sculptor Capital share where they are finding top credit opportunities". Business Insider. 2021-09-14.
  3. ^ "Jason Mudrick," CNBC, August 15, 2016.
  4. ^ "Mudrick's AMC Bet Backfires After Meme Frenzy Wrecks Hedges". Bloomberg. 2021-06-11.
  5. ^ "About Us". Mudrick Capital. Mudrick Capital. Retrieved October 28, 2018.
  6. ^ Parmar, Hema; Karsh, Melissa; Porzecanski, Katia (1 March 2017). "The Top Hedge Funds of 2016 Share Best Bets for This Year". Bloomberg News. Retrieved 27 October 2018.
  7. ^ Stephen Taub, "Mudrick Converts Verso Stake Into Activist Position," Institutional Investor, September 19, 2017.
  8. ^ Stephen Taub, "Jason Mudrick’s Not-So-Subtle Victory Lap," Institutional Investor, October 20, 2017.
  9. ^ "Mudrick Capital sues Globalstar over merger with FiberLight," Reuters, May 17, 2018.
  10. ^ "Mudrick Capital Sues Globalstar Over 'Self-Dealing' Merger". Bloomberg.com. 17 May 2018.
  11. ^ "Globalstar’s $1.65B merger terminated," New Orleans CityBusiness, August 3, 2018.
  12. ^ Ronald Orol, "LaSalle's Pebblebrook Deal Marks Insurgent Victory," The Deal September 6, 2018.
  13. ^ Kruppa, Miles; Aliaj, Ortenca (December 26, 2019). "Hedge fund Mudrick Capital prospers despite vaping backlash". Financial Times. Retrieved April 16, 2021.
  14. ^ Daniel Strauss, "A top hedge fund's reported $800 million bet on vaping could be in jeopardy as regulators set their sights on e-cigarettes," Markets Insider, September 26, 2019.
  15. ^ "AMC’s Sudden Surge Makes Winners of Silver Lake, Mudrick," Bloomberg, January 27, 2021.
  16. ^ Soma Biswas, "Hedge Fund Behind AMC Rescue Loan Made Hundreds of Millions in Gains," The Wall Street Journal, February 2, 2021.
  17. ^ Herbst-Bayliss, Svea (February 2, 2021). "Hot-ticket Gamestop deals blow to hedge funds' January returns, some escape". Reuters. Retrieved April 25, 2021.
  18. ^ Amelia Lucas, "Topps to go public through SPAC deal as baseball card company ventures into NFTs," CNBC.com, April 6, 2021.
  19. ^ "Trevor Lawrence NFT Collection Sells for $225K".
  20. ^ "Mudrick Capital Management". docoh.com. Retrieved 19 April 2021.