Hedge fund Lion Point Capital has responded to a press release issued earlier this week by Ally Financial, in which Ally complained Lion Point was trying to get the bank to form a “strategic alternatives committee” for Ally to consider selling itself.
New York-based Lion Point responded on Wednesday that a potential sale is only one alternative such a committee could consider, to address what the hedge fund sees as a persistent undervaluation of Ally stock.
“Lion Point’s goal is to ensure that the voices of Ally’s shareholders are heard and that policies are in place to address the significant undervaluation of the company, should such undervaluation persist,” the fund said in a press release of its own.
Detroit-based Ally said in its press release on Monday that Lion Point has less than 1% of Ally shares.
The hedge fund said it was “disappointed” that Ally went public with its behind-the-scenes discussion with Lion Point. Ally also disclosed that Lion Point notified Ally that the hedge fund intends to nominate two candidates for the Ally board of directors, for Ally’s next annual shareholder meeting, in May.
“Lion Point is particularly disappointed by this move given that it directly contradicted Ally’s consistent statements that it was in the best interest of all stakeholders to keep any dialogue regarding strategic alternatives private,” the hedge fund said.
Lion Point said it also made clear to Ally that the hedge fund advocated forming a strategic alternatives committee only if the Ally share price stays below a certain level. “We were rather surprised that Ally did not make this clear in its press release,” the hedge fund said.
