Globalstar could be the next Herbalife-like hedge fund battle.
A small hedge fund manager—$300 million Kerrisdale Capital—is trying for a Bill Ackman-style takedown of the satellite communications company, saying its stock is worth zero because the wireless spectrum it is vying to use is overvalued and its other revenues are small compared with its debt.
"Globalstar's equity is worthless," Kerrisdale founder Sahm Adrangi said in a report released Monday in conjunction with a live presentation midday in New York. "In virtually all scenarios, the combined value of the company's unprofitable core satellite business and the potential terrestrial applications of its spectrum assets falls below its massive debt burden, making the stock a zero."
That highly negative thesis puts Adrangi at odds with plenty of established hedge funds.
Among the company's largest shareholders are $21.6 billion York Capital Management, $3.4 billion Litespeed Management, $2.8 billion Hudson Bay Capital Management and $2.2 billion Ionic Capital Management, according to public filings as of June 30. All firm asset figures are as of July 1, according to the Absolute Return Billion Dollar Club. Other brand-name owners are BlackRock Fund Advisors, D.E. Shaw & Co. and Soros Funds Management.
Globalstar stock already fell as much as 32 percent on Oct. 1 on speculation that the company would be Kerrisdale's target before recovering slightly. The activist investor used Twitter to build interest and even made a comedy video promoting the event—perhaps the first multimedia promotion of a stock presentation by a hedge fund ever.
Representatives for Globalstar didn't immediately respond to requests for comment. But general counsel Barbee Ponder recently told Bloomberg that he disagreed with the claim that the company's spectrum rights were worthless. Jason Bernstein, an analyst at the Odeon Capital Group, also has written positive reports on the company.
The flagship Kerrisdale Partners fund is up 4.49 percent through August this year, according to performance information obtained by CNBC.com. The fund has produced annualized returns of 57.11 percent net of fees since launching in July 2009.
Globalstar's stock fell 11 percent midday Monday on heavy trading after earlier rising more than 10 percent.