• by Erik Sass  @eriksass1, September 22, 2009

 

Harbinger Capital Partners has sold roughly 18% of its stake in the New York Times Co., the hedge fund revealed in a regulatory filing Tuesday, in circumstances that suggest it may divest itself of more NYTCO shares in the future.

If true, this would seem to imply that Harbinger -- a dissident shareholder that has tried for several years to shake up NYTCO's management -- is throwing in the towel.

The sale of 5,000,000 shares on Thursday, Sept. 17 took advantage of a recent bump in NYTCO's stock price, which rose from just under $7.20 in early September to $8.25 on the day of the sale. However, the price was far lower than what Harbinger paid when it acquired its stake in 2007, at prices ranging from roughly $15 to %20.

The sale reduced Harbinger's stake in NYTCO to 23,538,434 shares, or 16.38% -- down from 19.94%. Originally, Harbinger invested over $500 million in the NYTCO before it sold part of its stake in the company last week, the value of its holdings was about $235 million.

Recent moves suggest that Harbinger is increasingly focused on getting out of NYTCO. In May, when the share price was hovering between $5.00 and $6.90, Harbinger executive Scott Galloway tried to sell the company's stake in NYTCO to mogul David Geffen and Larry Page, but these potential deals were derailed by Harbinger's demand for a premium, according to media reports.

If Harbinger does cut and run, it will be an embarrassing reversal for the hedge fund, which aimed to accomplish what other "Class A" shareholders failed to do -- exercise real authority over the company's management.

The NYTCO's two-tiered share structure gives the majority of seats on the board to owners of special "Class B" shares, including members of the Sulzberger family. In March 2008, Harbinger and its ally, Firebrand Partners, forced NYTCO to add an extra director to the board in March 2008, elected by "Class A" shares. The Sulzbergers maintained control of the majority of the board, with 10 seats to regular shareholders' five.

In previous years, the two-tiered share system came under fire from investors and investor advisement services, including Hassan Elmasry, an outspoken portfolio manager with Morgan Stanley. He ended up dumping Morgan Stanley's shares in NYTCO in October 2007 after a war of words with the Sulzbergers.

In the first six months of 2009, total NYTCO revenues declined 19.9% compared to the same period in 2008, to $1.19 billion, due largely to steep declines in newspaper ad revenues.