Culture clash over TD Ameritrade

Would you be happy with a stock that gained 37% annually over a decade? Ameritrade is up that much the past ten years. But that does not matter to SAC and Jana Partners. They have only owned the stock a short time.

Their letter to the board sheds light on the pissing match that is developing:

You can check out their impressive presentation here

JANA/SAC Presentation to TD Ameritrade board (pdf)

Toronto-Dominion holds 40% of TD Ameritrade, and the Ricketts family 21%.  SAC and Jana control only 8.4%, partially through derivatives.  So far the tussle over the company seems a little personal. Initial discussions clearly went poorly. This is getting ugly.

In any case, the Canadian’s are up in arms over the situation. Will they get away with telling SAC and Jana Partners to take a hike? This Canadian journalist is taking exception to ugly Americans throwing their weight around.
Even so, rare is the company that can escape without bruises when standing up to Mr. Cohen’s group. Ameritrade and its largest shareholder, Toronto-Dominion Bank, are going to try. SAC and New York hedge fund Jana Partners think Ameritrade should merge with one of its two main rivals and say TD Bank and Ed Clark, its CEO, are standing in the way. Mr. Clark’s strategy is to politely tell the hedge funds to go pound sand. It might work.

Round 1 went to the hedgies, if only for the way the press overstated their power and their investment. One newspaper reported that the funds had “quickly acquired 8.4 per cent of the shares” in Ameritrade. Uh, not quite. If they really owned that much, they’d have filed a 13D, a mandatory disclosure for activist shareholders who own 5 per cent or more of a U.S. stock. They haven’t, because they don’t.

Stay tuned to this one, sports fans.

Hedgies’ Ameritrade merger case heavy on hot air
Globe and Mail

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