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Highfields, other funds dove into Dell fray in first quarter

A company logo of Dell is seen on the cover of its laptop at a Dell outlet in Hong Kong October October 21, 2009. REUTERS/Bobby Yip
A company logo of Dell is seen on the cover of its laptop at a Dell outlet in Hong Kong October October 21, 2009. REUTERS/Bobby Yip

BOSTON (Reuters) - Several top stock-picking hedge funds bought about 30 million shares of PC maker Dell Inc in the first quarter, possibly increasing pressure on company founder Michael Dell to improve his bid to take the company private.

Dell is embroiled in a leveraged buyout deal proposed in February at $13.65 a share by its founder and private equity firm Silver Lake Partners. But the price has upset some of the company's largest shareholders.

Boston-based Highfields Capital, run by former Harvard endowment manager Jonathon Jacobson, bought 23 million shares of Dell in the first quarter, according to a securities filing on Wednesday. The activist hedge fund often presses for improvements from companies in which it invests.

Jeffrey Altman's Owl Creek Asset Management bought 4 million shares, and Farallon Capital Management, led by Andrew Spokes, took a new 2.46 million-share position in the first quarter.

Investors must vote a majority of Dell shares, excluding the 16 percent controlled by Michael Dell, in favor of the buyout for the deal to go through. The 30 million-share purchases, worth over $400 million at Wednesday's closing price, represent about 2 percent of Dell's shares outstanding, according to Thomson Reuters data.

The securities filings by the three hedge funds on Wednesday represented their holdings as of March 31. The funds could have added or reduced to their Dell stakes over the past 45 days.

Previous Dell shareholders, including T. Rowe Price Group and Southeastern Asset Management, opposed the buyout at the current offer price. Southeastern and billionaire investor Carl Icahn last week proposed that Dell pay a special dividend of $12 per share and remain a public company.

On Monday, a special committee of Dell directors said it needed more detailed information from Icahn about financing and future plans for the company before it could seriously consider his proposal. Under Icahn's plan, shareholders could choose to take the special dividend in cash or stock, costing the company as much as $21 billion.

Shares of Dell closed at $13.45 on the Nasdaq on Wednesday. The shares have traded below the $13.65 offer for the past four weeks after another possible bidder, Blackstone Group, dropped out.

(Reporting by Aaron Pressman; Editing by Steve Orlofsky)

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