Sotheby’s announced on Wednesday that it was reviewing its financial policies, after a number of high-profile hedge funds built up significant long positions in the auction house.
The company said that it was considering moves like a share repurchase or raising its dividend, taking into account a number of factors, including taking on new debt, the value of its real estate and possible tax issues.
“Each of these options present possible advantages and disadvantages; all are complex,†Bill Ruprecht, Sotheby’s chairman and chief executive, said in a statement. “We are determined to fully exploring every avenue and we are committed to pursuing return of capital alternatives.â€
As of June 30, the company reported having about $699.6 million in cash and short-term investments and $515.2 million in long-term debt.
The auction house’s announcement comes several weeks after Third Point, the big hedge fund run by Daniel S. Loeb, raised its stake in the company to 5.7 percent. The activist investor, known for forcing big changes at Yahoo and challenging Sony, is now one of Sotheby’s biggest shareholders.
In a filing disclosing its stake, Third Point wrote that it would “engage in a dialogue†with the company’s board.
Other hedge funds also own big stakes as well. Marcato Capital Management, a hedge fund run by a protégé of William A. Ackman, reported owning about 6.7 percent of Sotheby’s, while Nelson Peltz’s Trian Partners holds about 3 percent.
A spokeswoman for Third Point declined to comment. Representatives for Marcato and Trian weren’t immediately available for comment.
Shares in Sotheby’s rose 1.3 percent in early morning trading on Wednesday, to $48.01. They have climbed 4.9 percent since Third Point disclosed its increased stake.
