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Elliott wants Micro Focus, HPE Software and Suse owner, to go private

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Elliott Management founder and CEO Paul Singer speaks during the SkyBridge Alternatives conference in Las Vegas, May 9, 2012.

Jacob Kepler | Bloomberg | Getty Images

Elliott Management founder and CEO Paul Singer speaks during the SkyBridge Alternatives conference in Las Vegas, May 9, 2012.

Hedge fund Elliott Management is pushing UK software company Micro Focus, which merged with Hewlett Packard Enterprise‘s software business last year, to sell to a private equity firm, according to people familiar with the matter.

Elliott has taken a stake in Micro Focus, said the people, who asked not to be named because the transaction is private. The stake is not quite five percent, which is the automatic disclosure threshold, said the people.

Micro Focus has already received inbound interest from several private equity companies, said the people.

Elliott has also suggested that Micro Focus carve out and sell Suse Linux, which it acquired as part of a $1.2 billion deal for Attachmate in 2014.

Micro Focus’s market capitalization is about $5.5 billion. Elliott believes Suse Linux could be sold separately and is being severely discounted within the company. That could be appealing for a private equity firm looking to maximize its investment.

Suse is one of the leading distributions of the open source Linux operating system, which is used in many enterprise data centers. It competes most directly with Linux distributions from Red Hat, a publicly traded company with a market cap around $28 billion, and privately held Canonical, which is reportedly considering an IPO.

In general, these companies don’t sell licenses to use Linux, whose underlying source code is available for free to anybody to use and modify, but sell consulting and support services around it.

A Micro Focus spokeswoman didn’t immediately respond to comment. An Elliott Management spokesman declined to comment. The news that Elliot has a stake in Micro Focus was previously reported by Bloomberg News.

Micro Focus CEO Chris Hsu stepped down last month, less than a year after Micro Focus merged with some HPE software assets in a deal valued at $8.8 billion. Micro Focus also acquired Serena Software for $540 million from private equity firm HGGC in 2016.

Micro Focus shares fell the most in more than a decade after Hsu announced he was leaving and year-over-year revenue would be a greater decline than expected.



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The market is now pricing in almost a 50/50 chance of four rate hikes this year

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Federal Reserve Chairman Jerome Powell speaks at a news conference following the Federal Open Market Committee meetings in Washington, U.S., March 21, 2018.

Aaron P. Bernstein | Reuters

Federal Reserve Chairman Jerome Powell speaks at a news conference following the Federal Open Market Committee meetings in Washington, U.S., March 21, 2018.

The market is finally coming around to the idea that the Federal Reserve this year will be raising interest rates a total of four times.

Though some big forecasting firms on Wall Street for months have been predicting a more aggressive Fed, traders thus far had been anticipating three moves this year — the increase already approved in March, plus two more, likely in June and September.

However, the fed funds futures market Monday morning gave almost a 50 percent probability that the central bank would move one more time in December.

The CME’s FedWatch tool, which has been a reliable gauge of the Federal Open Market Committee’s actions, assigned a 48.2 percent chance in early trade. The move toward a more aggressive Fed came as the benchmark 10-year Treasury note yield hovered around 3 percent, which multiple bond experts have predicted would be a key level.

The probability had been just 33 percent a month ago and less than 40 percent as of late last week.

The CME computes the probability of a rate hike by taking the end-month futures contract, subtracting the level at the beginning of the month, and dividing that by 25 basis points, which is the assumed level of each rate hike. (A full explanation of the process is here. The fed funds contracts are here. To get the implied funds level for each month, subtract the contract level from 100.)

FOMC members themselves, in their latest forecast in March, still indicated three increases in the funds rate this year. However, with increasing signs of inflation picking up and as the market begins to price in more hikes, the committee could begin to set its sights higher.



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Bitcoin extends post-Tax Day rebound to $9,000

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Bitcoin rebounded above $9,000 over the weekend as the cryptocurrency extended post-Tax Day gains.

The digital currency traded near $8,878 as of 4:28 p.m. ET Monday, up more than $950 since last week, according to CoinDesk. Bitcoin has fallen more than 30 percent this year, and pundits blamed much of that price pressure on U.S. tax obligations.

Tom Lee, co-founder and head of research at Fundstrat Global Advisors, estimated U.S. households owed $25 billion in taxes on their cryptocurrency holdings after bitcoin’s rise to near $20,000 in 2017. The Internal Revenue Service views bitcoin and other cryptocurrencies as property, meaning profits from transactions are subject to capital gains tax.

Lee, the only major Wall Street strategist to issue bitcoin price targets, predicted bitcoin would recover after U.S. investors submitted their taxes and has a $20,000 price target for this year.

Bitcoin’s one-week rebound

Source: CoinDesk

Monday’s price marked a roughly 15 percent increase from the low of $7,834 hit Tuesday, which was the original deadline to file taxes. After the agency’s web page for making the payments crashed Tuesday, the IRS gave taxpayers another day to submit returns.

“We believe the ‘winter’ is ending for Bitcoin, as the crypto to fiat pressures from tax day subside, and as headline risks seem to be fading,” Lee said in a note to clients Friday.

Other “alt-coins,” or cryptocurrencies other than bitcoin, were also trading higher Monday. Ethereum, the second biggest cryptocurrency by market capitalization, was up 3.6 percent, while ripple rose roughly 1 percent, according to CoinDesk.

Bitcoin cash, which spun off from bitcoin in July, rose 17 percent Monday. The cryptocurrency has jumped 80 percent over the past week after developers announced a spin-off of the cryptocurrency, known as a “fork,” planned for May 15.



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Alcoa shares dive 12% after US reconsiders penalties against Russian competitor

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“Rusal has approached us to petition for delisting. Given the impact on our partners and allies, we are issuing a general license extending the maintenance and wind-down period while we consider Rusal’s petition,” Mnuchin added.

The latest decision from the Treasury Department sent aluminum prices swinging more than 5 percent lower.

Moscow’s Rusal was targeted during a wave of harsh U.S. sanctions earlier in April, freezing all of the company’s assets within U.S. jurisdiction.

Deripaska, a billionaire oligarch who previously ran Rusal, was also slapped with sanctions and has been charged in special counsel Robert Mueller‘s investigation regarding Russian involvement in the 2016 U.S. presidential election.

Alcoa did not wish to comment for this story at the time of its publication.



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