The founder of Steel Partners gets turned on his head as
investors successfully agitate for a new restructuring plan. By
Late last year, activist hedge fund manager Warren Lichtenstein
thought he had hit upon a clever solution to the big redemption
run on his Steel Partners II Fund. He proposed rolling the fund
into a publicly listed shell company that his firm already
controls. Instead of kudos, the portfolio manager got a taste
of his own medicine, as angry Steel investors banded together,
using some of his own activist tactics to oppose the move.
Lichtenstein's investors had reason to be upset. His
signature fund, Steel Partners II, which held about $1.2
billion in assets at yearend, lost 39% in 2008. As redemption
requests grew to represent some 40% of assets, Steel halted
withdrawals and proposed his restructuring plan, which
investors called unfriendly at best and a breach of...