MHR Fund Management takes its name from the initials of its founder and manager Mark H. Rachesky. Rachesky hasn’t topped the fund manager salary lists in recent memory, but these takes it takes a billion dollars to do so. MHR is located in New York and advises hedge funds that are focused on primarily on distressed mid-cap stocks. It relies mostly on fundamental analysis and also invests in distressed private equity. The firm was founded all the way back in 1996 and so it has seen and survived a number of market cycles.
Mark Rachesky’s Background
Rachesky is an exceptionally talented and credentialed individual. He holds a B.S. from the University of Pennsylvannia, a M.D. from the Stanford University of Medicine and a M.B.A from Stanford Graduate School of Business. So he has both advanced medical and science training and a very deep business background and contacts from one of the best business schools in the nation.
Rachesky is chairman of Leap Wireless and Loral Space and a director of Emisphere Technologies and Lionsgate Entertainment. All of this in addition to running his own hedge fund.
Back in the 1990’s Rachesky worked for Carl Icahn, who is one of the shrewdest investors around. So he definitely has a lot of experience in activist investing as well.
Rachesky is not afraid of a good fight. In March 2011, MHR went activist on Seahawk Drilling. The debt holders of Seahawk apparently fast tracked a sale of the firm’s assets to Hercules Offshore, but 9.8% equity holder Rachesky was having none of that. He felt that equity holders, including himself, were not given enough time to review the deal which sold virtually all of the firm’s assets and directed nearly of the proceeds to debt holders instead of equity holders.
The Student Faces the Master
In July 2010, Rachesky and MHR Fund Management found itself on the opposite side of the table from his former boss and mentor Carl Icahn over Lions Gate. Icahn launched a new takeover at $6.5 per share which was $0.50 less than his previous offer of $7 per share. Rachesky had previously bought convertible debt of Lions Gate and it was converted at $6.20 to common stock. This action diluted Icahn’s stake in the company and may perhaps have angered his former boss.