Home Markets This NYC Hedge Fund Will Reap A $90 Million Profit In The $8.4 Billion Smartsheet Deal

This NYC Hedge Fund Will Reap A $90 Million Profit In The $8.4 Billion Smartsheet Deal

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Smartsheet, an enterprise work management software platform, announced Tuesday that it will be acquired by Blackstone and Vista Equity Partners in an all-cash deal worth $8.4 billion. Shareholders will receive $56.50 per share, a 41% premium over the stock’s average closing price for the past three months, according to a press release.

Vista Equity Partners, which has more than $100 billion in assets, has long specialized in deals involving enterprise software companies. The Austin, Texas-based private equity firm was co-founded in 2000 by billionaire Robert F. Smith, known for his deal savvy but also for paying $139 million in taxes and penalties related to an illegal tax evasion scheme in 2020. New York City’s Blackstone, is the world largest private equity firm, with more than $1 trillion in assets.

New York hedge fund Eminence Capital, founded and managed by Ricky Sandler, appears to be the big winner in this deal among active investors. The firm, which manages $7.2 billion in assets and specializes in bottom-up value investing, held 4.3 million Smartsheet shares as of its latest filing for the second quarter. While that position may have changed since then, Eminence was the largest hedge fund holder of the stock at the end of June. Smartsheet was also the fund’s sixth largest holding, according to FactSet.

According to FactSet, Eminence started buying Smartsheet shares in the second half of 2022, when the stock was at its lowest point this decade. The fund initially bought 2.4 million shares at around $34 each and has since grown its position to 4.3 million shares, with an average purchase price of about $36 per share. With Smartsheet now being acquired at $56.50, Eminence Capital stands to make around $90 million, a 60% gain in just two years.

This isn’t the first time Sandler and Eminence Capital have cashed in on a high-profile acquisition. The fund was the largest hedge fund owner of Keurig Green Mountain when it was purchased in 2015 by JAB Capital at a 78% premium. A month before the deal, Sandler had publicly championed Keurig’s stock at the Invest for Kids Chicago conference, a hedge fund industry event.

Eminence Capital didn’t immediately respond to a request for comment. The deal is expected to close by the end of January.

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