Hedge Funds

Paulson & Co. Inc., whose funds own as of the record date 12,800,000 shares or approximately 9.9% of the outstanding shares of Plains Exploration & Production Co. (NYSE: PXP), today issued the following statement regarding the amended merger agreement between Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) and Plains:

"Paulson & Co. appreciates the flexibility of both Plains and Freeport in adding incremental cash to the transaction and will vote all the shares owned by funds under its management in favor of the merger. We further support Freeport's strategy in acquiring both Plains and McMoRan Exploration as it adds another avenue for growth, diversifies its cash flows, and increases the proportion of earnings from the United States."

The U.S. has issued a subpoena to SAC Capital founder and hedge fund giant Steven A. Cohen tied to the government's insider trading investigation.

The NYTimes said Monday that the subpoena is part of a broader series of requests from criminal authorities. Other SAC execs have been sent subpoenas as well.

News comes following headlines last week that Cohen's firm would no longer be cooperating with the U.S. on an unconditional basis. The move hints that Cohen is instituting his constitutional right to not self-incriminate himself, which could happen if he were to testify in front of a grand jury and be asked a series of broad questions.

No official charges have been brought about on SAC or Cohen himself.

Lazard Capital is out with a few comments on NetApp (Nasdaq: NTAP) into Q4 results. The firm has NetApp at Neutral with no price target.

Analyst Ed Parker thinks negative sentiment in the storage space is overdone and a virtuous product cycle along with easier comps accelerating growth in the latter part of 2013. He commented, "Despite these positives, we remain concerned about competition, and weakness in OEM, federal, and Europe. The stock has outperformed its closest comp, which may be justifiable given the re-rating of VMware (NYSE: VMW). However, with recent appreciation most likely driven by activist developments, we think NT upside now rests on something meaningful on the capital allocation or strategic front occurring." He prefers EMC (NYSE: EMC).

Fiscal Q413 results should be in-line, Parker notes, given mixed checks. Overly weak North America infrastructure spending should be partially offset by improving trends in April.

On OEM E-series sales, Parker comments, "we think y/y growth in branded product growth is the more important metric, but slowing sales to IBM, ORCL, and others could present an unneeded top-line drag."

On news that Elliott Management took a stake in the company, Parker doesn't see any near-term alterations to the way the company manages its cash. A headcount reduction might be possible.

Parker sees Q4 EPS of 68 cents on revs of $1.77 billion.

For an analyst ratings summary and ratings history on NetApp click here. For more ratings news on NetApp click here.

Shares of NetApp closed at $37.84 yesterday, with a 52 week range of $26.26-$39.15.

BMO Capital analyst Keith Bachman reiterated his Market Perform rating on NetApp (NASDAQ: NTAP) ahead of results on May 21st. Bachman believes consensus estimates for the July quarter are too high, resulting in potential lower guidance. That said, given that Elliot Management is taking a more active role, they do not think a lower revenue guide will cause the stock to have a meaningful pullback.

"We think NTAP has ample resources to move to a more shareholder friendly posture on capital allocation, which we have mentioned previously – a 3% buyback and a 3% dividend, though we doubt NTAP's management would move to such an aggressive capital allocation plan near term," the analyst states. "Nevertheless, given the lack of meaningful tech investment opportunities, we think the potential for such a
change of capital allocation strategy (including the potential for shareholders to push
management), NTAP’s stock will get the benefit of the doubt."

If NTAP were to take an aggressive stance on buyback, shares could be much higher, the analyst said.

"For example, if we assumed a buyback of 10 million shares per year, and operating margins of 18.5% in FY15, we believe EPS could be in the range of $3.05-$3.20... Based on the scenario above, with earnings power mentioned above of approximately $3.05-$3.20, and a target multiple of 14x-15x, we believe that NTAP has stock upside potential to around $45."

For an analyst ratings summary and ratings history on NetApp click here. For more ratings news on NetApp click here.

Shares of NetApp closed at $37.84 yesterday, with a 52 week range of $26.26-$39.15.

Steven Cohen's SAC Capital has told its clients that cooperation with the U.S. is no longer "unconditional," according to Bloomberg. The firm said it will have more clarity on the situation in coming months.

News comes from an SAC letter to clients.