These 7 hedge funds could've gotten hit the hardest hit as Arconic plunged on Tuesday

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Aluminum workerA worker controls forming of aluminium ingots on a conveyor belt at the foundry shop of the Rusal Krasnoyarsk aluminium smelter in Krasnoyarsk, Russia.Reuters/Ilya Naymushin

  • Arconic, the aluminum-products maker, plunged 16% Tuesday after its board of directors said the company was no longer for sale.
  • The decision was a blow to Arconic's biggest shareholder Elliott Management, which has been working hard to push for a sale of the company.
  • Arconic's plunge on Tuesday may have caused Elliott to lose $166 million, according to Markets Insider's calculation.
  • Seven hedge funds, could have lost a total of $246 million on Tuesday.

The aluminum-products maker Arconic plunged 16% Tuesday after its board of directors said the company is no longer for sale. But seven hedge funds could have lost hundreds of millions of dollars hours after the announcement.

"Together with management, we have been conducting a rigorous and comprehensive strategy and portfolio review
over the past year and as part of that process considered a sale of the company, among other matters," chairman John Plant said in a press release.

"However, we did not receive a proposal for a full-company transaction that we believe would be in the best interests of Arconic's shareholders and other stakeholders."

Arconic used to be a part of the metals company Alcoa, but was spun off on November 1, 2016. The company's traditional smelting business kept the Alcoa name, while Arconic retained the added-value aerospace and automotive business involving strong, light alloys.

Shares debuted for trading at $22.24 apiece and put in a high of $31.37 on January 16, 2018. But they have since lost more than a third of their value as Arconic has grappled with having to pay higher aluminum prices following its split from Alcoa. Additionally, the company has struggled to keep up with demand.

On February 5, 2018, Arconic initiated its strategy and portfolio review in which it considered selling itself. Arconic's biggest shareholder - the billionaire hedge-fund manager Paul Singer's Elliott Management - was behind the push for a sale of the company.

According to Reuters, the private-equity firm Apollo on Monday tried to acquire Arconic for $22.20 a share, but the offer was rejected. The bid was worth about $17 billion, including Arconic's $6.3 billion total debt.

The decision was a blow to Elliott, which has an 11% stake in Arconic, according to its most recent filing. Arconic's plunge on Tuesday could have caused Elliott to lose $166 million, by Markets Insider's calculation.

And Elliott is just one of the hedge funds that could've been hit hard by Arconic's plunge. The company's seven biggest hedge-fund investors could have lost $246 million in total on Tuesday.

To clarify, the firms could have sold their shares before Tuesday, avoiding some or all of the decline. Additionally, they could have hedged their positions, offsetting any losses.

Below are seven hedge funds that own the largest positions in Arconic, according to their most recent filings:

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Empyrean Capital Partners

Empyrean Capital Partners

Position: 1,376,050

Percent of Arconic outstanding: 0.28%

Potential loss: $4.4 million

Source: Bloomberg

Citadel Advisors

Citadel Advisors

Position: 1,539,091

Percent of Arconic outstanding: 0.32%

Potential loss: $4.9 million

Citadel did not immediately respond to request for comment.

Source: Bloomberg

Brigade Capital Management

Brigade Capital Management

Position: 1,783,500

Percent of Arconic outstanding: 0.37%

Potential loss: $5.7 million

Source: Bloomberg

DE Shaw &Co

DE Shaw &Co

Position: 4,923,816

Percent of Arconic outstanding: 1.02%

Potential loss: $15.8 million

Source: Bloomberg

Kensico Capital Management

Kensico Capital Management

Position: 6,945,000

Percent of Arconic outstanding: 1.44%

Potential loss: $22.2 million

Source: Bloomberg

Canyon Capital Advisors

Canyon Capital Advisors

Position: 8,500,768

Percent of Arconic outstanding: 1.76%

Potential loss: $27.2 million

Source: Bloomberg

Elliott Management

Elliott Management

Position: 51,902,133

Percent of Arconic outstanding: 10.74%

Potential loss: $166.1 million

Elliott Management did not immediately respond to request for comment.

Source: Bloomberg

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