Dana Corp., Toledo, Ohio, is examining pure alpha strategies such as long-short hedge funds, according to sources familiar with the situation. One source who has spoken about the matter with Ralph J. Lipford, Dana's vice president of investment management, said the company might invest a portion of an upcoming contribution in a hedge fund of funds.
The company recently announced it will contribute $200 million to its $2.3 billion pension plan in the fourth quarter to ease underfunding. According to Dana's most recent annual report, long-term liabilities total about $2.9 billion, making it about 20.6% underfunded. The contribution will come from the proceeds of the firm's upcoming sale of its after-hours automotive parts business to the Cypress Group, a private equity firm.
Mr. Lipford did not return phone calls requesting further information.