Activism Update – June 7

by | Jun 9, 2024

Activism Snapshot

Egon-Jones joined ISS and Glass Lewis in supporting all nine of WisdomTree’s (WT) board nominees. In the Glass Lewis report they stated “the board has made meaningful strides to empower its newer directors” and ISS said “there is no case for incremental change at this juncture”. WT defends the long-tenures of Anthony Bossone (15+ years), Win Neuger (10+ years) and Jonathan Steinberg (16+ years) stating it provides stability and preserves institutional knowledge. Given their C, C-, C Boardroom Alpha ratings and delivering 3%, -1%, and 3% annualized TSR (respectively), we’d suggest that these directors are riding a wave of recent performance that has made their tenures look better than it is. The better defense is that the board is actually actively refreshing with 6 new directors in just the last few years and that they expect this to continue. Though, ETFS Capital rightly points out that its activism has led to many of the improvements to the board including the refreshment and declassification.

Glass Lewis recommended Medallion (MFIN) shareholders vote for the board’s nominees and MFIN was fast to promote the fact by placing advertising via google and other online display advertising. We find any company’s argument that an activist is “self-serving” laughable given everyone involved at a company — the employees, the management, the investors (including activists) — are all trying too make money in their own self-serving interests. The reality of the MFIN situation is that the company’s performance is underwhelming, the board has long-serving directors with underwhelming track records (evidenced by lower Boardroom Alpha ratings and low TSRs over their tenures), and their governance has issues. From the outside perspective, it seems reasonable to ask whether the current MFIN board and executives are the right team to drive outperformance and materially increase shareholder value.

F9 Investments continued to hammer home their case that the LL Flooring (LL) management team has made major strategic mistakes (e.g. dropping the well-known Lumber Liquidator brand name) resulting in the destruction of shareholder value with the stock dropping over 93% in the last three years. F9 Investments also cites concerns voiced by other large LL Flooring shareholders including Donovan S. Royal and Howard Jonas on behalf of a consortium of shareholders. As the reader can see from the LL stock price graph to the right, it’s been a disastrous 3-year period with the stock plummeting and rife with red flags. Those red flags include the recent going concern risk (ie the company may go out of business) cited by the company’s auditors.

Latest Activism and Governance research from Boardroom Alpha:

 

ACTIVISM UPDATE

LATEST 13-D FILINGS

FILED TICKER COMPANY FILED BY OWNERSHIP 1-Year TSR SUMMARY FILING
2024-06-05 BHIL BENSON HILL INC iSelect Fund Management, LLC 7.6% -84.7% In discussions with the management and board about strategic options. 2024-06-05 – SC 13D
2024-06-03 TALO TALOS ENERGY INC Carlos Slim Helu 20.5% -20.0% Increased their position to just over 20% of TALO 2024-06-03 – SC 13D
2024-06-03 WSR WHITESTONE REIT MCB PR Capital LLC 9.4% 57.9% MCB offering $700M to acquire WSR. 2024-06-03 – SC 13D

 

LATEST PROXY CONTEST FILINGS

TICKER COMPANY TSR 1/3yr MEETING DATE LATEST PROXY SUMMARY TARGET FILINGS ACTIVIST FILINGS
BHR BRAEMAR HOTELS & RESORTS INC -21.9%
-45.5%
Jul 30 2024-04-11 – PREC14A
  • Nominating four directors: Michael Cricenti, Jennifer M. Hill, Betsy L. McCoy and Steven J. Pully
  • Proposal to remove “overreaching” advance notice bylaw provision
  • Proposal to urge the Board to amend the Bylaws to preclude any current or former employee, director, officer, or control person of the Corporation or Ashford (as defined in the Proxy Statement) and Ashford’s affiliates from serving as the Corporation’s chairman of the Board
  • Proposal to require the Board to disclose all extraordinary transaction proposals made by stockholders, affiliates and third parties during the two most recently completed calendar years and the terms of those proposed transactions
  • Proposal to require the Board to disclose all compensation paid by the Corporation to members of the Bennett family, The Dallas Express and employees, directors or agents of The Dallas Express, including Louis Darrouzet
BRAEMAR HOTELS & RESORTS INC
May 23 – DEFA14A
May 22 – DEFA14A
May 22 – DEFA14A
May 21 – DEFA14A
May 20 – DEFA14A
May 17 – DEFA14A
May 16 – DEFA14A
May 15 – DEFA14A
May 15 – DEFA14A
May 14 – DEFA14A
BLACKWELLS CAPITAL LLC
May 20 – DFAN14A
May 17 – DFAN14A
May 16 – DFAN14A
May 16 – DFAN14A
May 13 – DFAN14A
May 10 – DFAN14A
May 09 – DFAN14A
May 08 – DFAN14A
May 07 – DFAN14A
May 03 – DFAN14A
EHAB ENHABIT INC -31.0% TBD 2024-05-28 – PREC14A
  • AREX Capital owns 4.8% of the shares of Enhabit (EHAB)
  • AREX Capital believes EHAB strategic review should have resulted in a sale of the company.
  • AREX Capital believes EHAB board lacks “Health and Hospice” expertise
  • AREX nominating 7 directors to the board: Megan Ambers, James T. Corcoran, Maxine Hochhauser, Mark W. Ohlendorf, Anna-Gene O’Neal, Dr. Gregory S. Sheff, Juan Vallarino.
ENHABIT INC
May 23 – PREC14A
May 23 – DEFA14A
AREX CAPITAL MANAGEMENT, LP
May 29 – DFAN14A
May 28 – PREC14A
May 09 – DFAN14A
LL LL FLOORING HOLDINGS INC -66.0%
-92.9%
Jul 10 2024-05-31 – DEFC14A
  • Seeking to elect 4 directors: Thomas D. Sullivan, John Jason Delves and Jill Witter
  • Recommending voting “WITHHOLD” for company nominees: Douglas T. Moore, Ashish Parmer and Nancy M. Taylor
  • F9 group includes Mr. Sullivan who founded the company in 1994 and served as Chair through 1994
  • F9 previously made a bid to acquire the company for $5.76 per share — a 100% premium to the then 52-week low of $2.75
LL FLOORING HOLDINGS INC
Jun 07 – DFAN14A
Jun 07 – DEFA14A
Jun 05 – DEFA14A
Jun 03 – DEFA14A
Jun 03 – DEFA14A
Jun 03 – DEFA14A
May 31 – DEFA14A
May 24 – DEFC14A
May 20 – PREC14A
May 20 – DEFA14A
F9 INVESTMENTS LLC
Jun 03 – DFAN14A
Jun 03 – DFAN14A
May 31 – DFAN14A
May 31 – DEFC14A
May 28 – PRRN14A
May 20 – PREC14A
MASI MASIMO CORP -24.2%
-40.9%
TBD 2024-06-03 – PREC14A
  • Politan Capital, owning ~9% of MASI, has nominated two directors to the board of Masimo
  • Politan Capital previously won two board seats at last year’s shareholder meeting
  • Politan has nominated William Jellison, former CFO of Stryker and Darlene Solomon, former CTO of Agilent Technologies
  • Politan paints a picture (see their filings) of MASI being uncooperative and freezing their board members out
  • Masimo (see their filings) refutes Politan’s claims
MASIMO CORP
May 31 – PREC14A
May 31 – DEFA14A
May 31 – DEFA14A
May 20 – DEFA14A
May 16 – DEFA14A
May 13 – DEFA14A
May 13 – DEFA14A
May 09 – DEFA14A
Apr 02 – DEFA14A
Apr 01 – DEFA14A
POLITAN CAPITAL MANAGEMENT LP
Jun 03 – PREC14A
Jun 03 – DFAN14A
May 10 – DFAN14A
Mar 25 – DFAN14A
MFIN MEDALLION FINANCIAL CORP 23.2%
-0.1%
Jun 11 2024-04-29 – DEFC14A
  • ZimCal looking to add Stephen Hodges and Judd Deppisch to the board
  • ZimCal flags long-term underperformance with Medallion down 40% over the last 10 years and heightened near-term risk from subprime exposure
  • ZimCal has published a site supporting its case at: https://restoretheshine.com/
MEDALLION FINANCIAL CORP
Jun 04 – DEFA14A
Jun 04 – DEFA14A
May 31 – DEFA14A
May 28 – DEFA14A
May 24 – DEFA14A
May 22 – DEFA14A
May 21 – DEFA14A
May 20 – DEFA14A
May 13 – DEFA14A
Apr 29 – DEFC14A
ZIMCAL ASSET MANAGEMENT, LLC
Jun 04 – DFAN14A
Jun 03 – DFAN14A
May 30 – DFAN14A
May 29 – DFAN14A
May 29 – DFAN14A
May 28 – DFAN14A
May 24 – DFAN14A
May 21 – DFAN14A
May 21 – DFAN14A
May 16 – DFAN14A
MRC MRC GLOBAL INC 38.0%
13.5%
TBD 2024-03-19 – PREC14A
  • Nominating two directors to the board: Brad Favreau and Daniel Silvers
  • Engine Capital believes that MRC is significantly underperforming, especially relative to DNOW Inc.
  • Engine Capital believes that MRC’s inability to settle it’s ongoing dispute with Cornell Capital is preventing MRC from optimizing capital structure
  • Engine Capital believes that MRC’s M&A strategy is flawed and that CEO Rob Saltiel does not have a successful track record in acquisitions or integrations
MRC GLOBAL INC
Apr 02 – DEFA14A
Mar 19 – DEFA14A
ENGINE CAPITAL, L.P.
Mar 19 – PREC14A
Mar 19 – DFAN14A
NVAX NOVAVAX INC 149.1%
-89.3%
TBD 2024-05-06 – PREC14A
  • Shah Capital Management intends to vote against Novavax directors Richard H. Douglas, Margaret G. McGlynn, and David Mott
  • Shah Capital Management believes that Novavax is undervalued and continues to suffer from poor profitability, despite the substantial value to be unlocked in the Company’s Matrix-M adjuvant platform and non-mRNA protein vaccine portfolio.
  • Shah Capital Management met with management and the board multiple times over the course of 2023 and 2024, but believes Novavax has been unresponsive to their suggestions.
NOVAVAX INC
Jun 05 – DEFA14A
Apr 29 – DEFA14A
SHAH CAPITAL MANAGEMENT
May 20 – DFAN14A
May 13 – DFAN14A
May 08 – DFAN14A
May 07 – DFAN14A
May 06 – PREC14A
May 06 – DFAN14A
SLRX SALARIUS PHARMACEUTICALS INC -73.3%
-98.6%
TBD
  • Mismanagement and Poor Performance: The letter claims that Salarius Pharmaceuticals is mismanaged by its current Board and management, leading to a significant decline in shareholder value and underperformance of the company.
  • Compensation Issues: The letter criticizes the Board for failing to establish a culture of accountability, highlighting excessive and poorly justified salary increases and stock option grants to executives despite the company’s poor performance and declining stock price.
  • Misaligned Incentives: The author points out that the Board members and executives hold a minimal percentage of the company’s shares and have not made open market purchases, indicating a lack of alignment with shareholder interests.
  • Questionable Decisions and Lack of Transparency: The letter accuses the Board of engaging in “curious compensation practices” and “disclosure diffusion,” making it difficult for shareholders to get a clear understanding of executive compensation and undermining informed voting.
  • Call for Change: The activist argues for the need for new Board members with fresh perspectives and better alignment with shareholder interests, expressing a lack of confidence in the current Board’s ability to improve the company’s performance and accountability.
SALARIUS PHARMACEUTICALS INC
Mar 26 – DEFA14A
ELVIN LEE
Mar 20 – DFAN14A
SPRU SPRUCE POWER HOLDING CORP -40.9%
-93.9%
TBD 2024-04-17 – PREC14A
  • Clayton Partners, JSCC Family Trust, and Jason Stankowski are contesting the proxy
  • Clayton is nominating Jason Stankowski and Clara Nagy McBane to the board
  • Clayton believes the company is not being managed to the benefit of its shareholders — believes “Spruce is, at worst, a break-even business and has significant opportunities for positive cash flow generation going forward”
  • Clayton disagrees with the company not buying back any stock despite trading at a 25% discount to the estimated value of the stock
SPRUCE POWER HOLDING CORP CLAYTON PARTNERS LLC
May 31 – PRRN14A
Apr 18 – DFAN14A
Apr 17 – PREC14A
WT WISDOMTREE INC 42.4%
49.0%
Jun 12 2024-05-03 – DEFC14A
  • ETFS Capital owns approximately 10% of Wisdom Tree (WT) and believes “immediate action to unlock significant value for all stockholders and halt further value destruction.”
  • Puts a focus on WT’s strategy of transitioning to a decentralized finance (DeFi) business and believes that it resulted in poor management of the core, profitable ETF business.
  • Believes the company’s true value lies in its ETF business, which suffers from poor profitability despite record assets under management.
  • Believes its attempts to be collaborative have been met with ” a public and bafflingly hostile response.”
  • Seeking
WISDOMTREE INC
Jun 06 – DEFA14A
Jun 06 – DEFA14A
Jun 03 – DEFA14A
May 31 – DEFA14A
May 23 – DEFA14A
May 23 – DEFA14A
May 13 – DEFA14A
May 06 – DEFA14A
Apr 30 – DEFA14A
Apr 29 – DEFC14A
ETFS CAPITAL LIMITED
Jun 04 – DFAN14A
Jun 03 – DFAN14A
May 28 – DFAN14A
May 21 – DFAN14A
May 14 – DFAN14A
May 06 – DFAN14A
May 03 – DFAN14A
May 03 – DEFC14A
Apr 30 – PRRN14A
Apr 18 – DFAN14A

 

RECENT COOPERATION AGREEMENTS

TARGET 1-Year TSR ACTIVIST SUMMARY FILING DATE STOCK CHANGE DAYS SINCE
ANIKA THERAPEUTICS INC (ANIK) -1.8% Caligan Partners LP
  • Increasing board to 10 directors
  • Appointing William Jellison as an independent Class I director (2024) and Joseph Capper as an independent Class II (2025)
  • Board will nominate and support Jellison at 2024 annual meeting
  • Mr. Jellison and Mr. Capper will be appointed to the Capital Allocation Committee
  • Board size will decrease to 9 directors at 2024 annual meeting
  • Company agreed to implement a share repurchase program
View Filing 2024-05-28 6.0% 10
PRESIDIO PROPERTY TRUST INC (SQFT) -6.2% Zuma Capital Management
  • Zuma Capital Management withdraws its letter notifying Presidio of its intention to nominate directors
  • Cooperation agreement in effect until 2026 annual shareholder meeting
  • Board increased from 6 to 7 directors
  • Elena Piliptchak added as a Class III Director with term expiring at 2026 meeting
  • Elena Piliptchak to be placed on Nominating & Governance and one of the Audit, Compensation or new Strategy committees
  • Zuma must maintain minimum of 3% ownership
View Filing 2024-05-09 -4.1% 29
ALIGHT INC (ALIT) -13.7% Starboard Value
  • Increased board from 9 to 11
  • Appointed Dave Guilmette and Coretha Rushing
  • Annual meeting to be held no later than July 26, 2024
View Filing 2024-05-06 -18.7% 32
APPLIED DIGITAL CORP (APLD) -47.4% Oasis Management Co Ltd.
  • Appointed Ella Benson, an employee of Oasis, to the Company’s Board of Directors
View Filing 2024-05-01 81.9% 37
ZUORA INC (ZUO) -11.9% SCALAR GAUGE MANAGEMENT, LLC
  • Appointed John D. Harkey, Jr. to the board
View Filing 2024-05-01 1.5% 37
TRIUMPH GROUP INC (TGI) 27.7% Vision One Management Partners, LP
  • Including Courtney R. Mather for election as a director at the 2024 shareholder meeting
  • Appointed Julio C. Acero, an Investment Analyst of Vision One, as a board advisor
View Filing 2024-05-01 13.1% 37

 

RECENT PROXY CONTEST RESOLUTIONS

TICKER COMPANY MEETING DATE RESULTS ACTIVIST SITUATION SUMMARY
SBOW SILVERBOW RESOURCES INC May 29 (adjourned from May 21)
  • On May 22, 2024 Kimmeridge withdrew its nominees in light of the Silverbow’s pending sale to Crescent Energy
  • Ben Dell, Co-Founder and Managing Partner of Kimmeridge, said, “While we are disappointed that SilverBow’s Board does not appear to have run a comprehensive sales process, our campaign was always underpinned by a strong belief that consolidation is in the best interests of shareholders.”
  • Read SilverBow’s sale announcement here
  • SilverBow Resources has rejected multiple offers, over the past two years, by Kimmeridge Energy Management — the latest offer valued SBW at $2.1 billion
  • SilverBow believes the offer substantially undervalues the company
  • Kimmeridge holds a 12.9% stake in SilverBow, along with Riposte Capital, the second-largest shareholder
  • Kimmeridge is also attempting to get 3 directors onto the board
  • SilverBow has rejected the three nominees citing concerns over their independence and representation of all shareholders’ interests
  • May 21st meeting was adjourned to “allow additional time for recent developments to be considered by shareholders”
  • Shareholder meeting will reconvene on May 29th, 2024
XPER XPERI INC May 24
  • Rubric Capital opposes 2 of the 5 directors up for re-election: Deborah S. Conrad and Thomas A. Lacey
  • Rubric filed their first 13 D on January 23, 2024
  • Rubric sent XPER board a letter on January 22, 2024 nominating their directors
  • Xperi began trading as a separate company on Oct 1, 2022 after spinning out of Xperi Holding (no named Adeia Inc)
  • Xperi is down nearly 30% since the spin-off
  • Xperi has an elevated Boadroom Alpha Activist Vulnerability Score and C- average board rating
  • CEO Kirchner was paid $9.9M in 2022 despite the significant shareholder losses
  • Xperi powers the next generation of smart devices, automobiles and entertainment experiences of all kinds
GNK GENCO SHIPPING & TRADING LTD May 23
  • All Genco directors were elected with over 85% support
  • Say-on-Pay received 87% support
  • Genco said: “We believe that the decisive results of this meeting reflect our shareholders’ confidence in Genco’s Board of Directors and management team and our Comprehensive Value Strategy.”
  • Full voting results: 8-K 5.07
  • GK Investor / George Economou has provided notice that it is nominating 2 directors: Randee Day and Robert M. Pons
  • George Economou: “As a significant Genco shareholder, I strongly believe in the Company’s potential to deliver improved value for shareholders. Both Randee and Robert have highly relevant backgrounds that would, in my view, be additive in the boardroom and would help address Genco’s lagging performance. I believe the entire Board would benefit from their fresh perspectives and collective knowledge of the maritime and technology sectors and experience in finance, corporate strategy and governance.”
CCI CROWN CASTLE INC May 22
  • Crown Castle (CCI) announced via press release that all 12 of the company’s nominees were elected to the the board.
  • There was no mention of vote counts, so we’ll need to wait for the official 8-K 5.07 to be filed.
  • Crown Castle Inc. is facing a proxy battle initiated by its co-founder, Ted B. Miller, and his investment vehicle.
  • Ted B. Miller criticized the Board’s actions, asserting that they wasted shareholder resources during a period of significant value destruction.
  • Boots Capital called for immediate change, advocating for new independent directors and a fresh start.
  • Miller points to Crown Castle’s board rewriting its cooperation agreement with Elliott Management as an admission that the initial process was tainted.
  • The rewritten agreement still did not require Elliott to maintain an equity position in the company.
  • Miller has filed a lawsuit to invalidate Crown Castle’s cooperation agreement with Elliott.

 

Recent Analysis

Activism Update – June 17

WisdomTree (WT) and Medallion (MFIN) win their fights. Trian downsizes its stake in Invesco (IVZ). Enhabit (EHAB) and Masimo (MASI) set their meeting dates as their shareholders continue to lose value.

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