Activism Update – May 31

by | May 31, 2024

Activism Snapshot

Arex Capital came out firing against the board and management team at Enhabit (EHAB) this week in a scathing letter to EHAB shareholders. Arex Capital has many issues with the company, but one we certainly agree with is that the pre-planned retirement of four directors does not constitute “board refreshment.” And, given the board has overseen a loss of 60% of market cap in the past ~2 years, we also agree that they need real board refreshment. Interesting to us is that in its preliminary proxy, Arex chooses to make no recommendation with respect to the Say-On-Pay vote for executive compensation. At last year’s vote, 87% of shareholders voted for the measure, so already showing signs of discontent. We expect that number to drop even lower at this year’s vote.

F9 Investments released their preliminary proxy in the LL Flooring Holdings (LL) fight. F9 Investments is recommending for its 3 nominees and against 3 of the company’s nominees — Douglas T. Moore, Ashish Parma, and Nancy M. Taylor. They are making no recommendation on Jerald Hammann who has put himself forward to be elected. Unlike Arex at EHAB, F9 Investments is recommending a vote against Say-On-Pay. Again, we expect to see a number below last year’s 88% FOR, but given the relatively low compensation of $1.9M in 2023, don’t expect to see the support drop too dramatically unless as part of the broader message regarding performance.

Masimo (MASI) vs. Politan, here we go! In press release out just today Masimo announced it is nominating Christopher Chavez to the board following Rolf Classon’s unexpected resignation from the board early in May. The Masimo team believes Chavez to be a experienced, proven operator in the medical device sector that will help drive the company forward. In addition, Masimo offered to Politan that they would also add Politan nominee William Jensen to the board, but Politan declined.

Institutional Shareholder (ISS) came out in support of Medallion Financial’s (MFIN) board nominees. ISS bases its support on MFIN’s TSR outperformance, collaboration with shareholders, and continued growth generally. For its part, ZimCal filed a DFAN14A with its letter to shareholders from the 28th of May. In the letter, ZimCal argues that there are two big reasons why MFIN’s board is against putting their nominees on the board. First, MFIN is embroiled in SEC investigations where the SEC will seek “some of the harshest penalties against Mr. Murstein and Medallion” and, if ZimCal’s nominees join the board they will call for an independent investigation. Second, they believe “Mr. Murstein…knows that if we are elected, his very comfortable perks and excessive compensation might be severely impacted.” For context, in 2023 CEO Alvin Murstein made $3M with over half, $1.6M, of that in nonequity incentive plan compensation. His overall compensation also includes $26k for a car lease, some amount for a garage, some amount for car insurance, and a country club membership for him to drive his leased car to.

On May 23rd WisdomTree (WT) posted a 23-page investor presentation to make its case for the board and management. This week ETFS Capital shared its response stating the presentation “was a continuation of its playbook and continued to avoid engaging with the central issue of our campaign, a flawed and value destructive approach to capital allocation that has led to a significant undervaluation of the Company’s core-ETF business.”

Latest Activism and Governance research from Boardroom Alpha:

ACTIVISM UPDATE

MAY 2024 COOPERATION AGREEMENTS

TARGET 1-Year TSR ACTIVIST SUMMARY FILING DATE STOCK CHANGE DAYS SINCE
ANIKA THERAPEUTICS INC (ANIK) -6.1% 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 3.8% 3
PRESIDIO PROPERTY TRUST INC (SQFT) -5.7% 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 -9.3% 22
ALIGHT INC (ALIT) -8.6% 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 -19.3% 25
APPLIED DIGITAL CORP (APLD) -47.2% Oasis Management Co Ltd.
  • Appointed Ella Benson, an employee of Oasis, to the Company’s Board of Directors
View Filing 2024-05-01 54.9% 30
ZUORA INC (ZUO) -6.4% SCALAR GAUGE MANAGEMENT, LLC
  • Appointed John D. Harkey, Jr. to the board
View Filing 2024-05-01 -1.5% 30
TRIUMPH GROUP INC (TGI) 20.7% 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 4.3% 30

 

LATEST 13-D FILINGS

FILED TICKER COMPANY FILED BY OWNERSHIP 1-Year TSR SUMMARY FILING
2024-05-30 WOW WIDEOPENWEST INC LB Partners LLC 7.9% -39.3%
  • LB Partners, owning ~7.9% of WOW, is the second-largest and largest non-conflicted owner after Crestview Partners.
  • WideOpenWest received an unsolicited acquisition offer for $4.80 per share two days before their strong Q1 report.
  • The Special Committee was formed to evaluate this offer in line with the Board’s fiduciary duties.
  • The proposed price is considered offensively low by LB Partners.
  • The offer by Crestview and DigitalBridge Investments attempts to exploit a period of undervaluation.
  • WOW is significantly undervalued at both $3.70 and $4.80 per share, with a fair value estimated at over $10.00 per share.
  • For all the points LB Partners makes in their letter, read here.
2024-05-30 – SC 13D
2024-05-23 HLGN HELIOGEN INC Galloway Capital Partners, LLC 6.4% -95.5% Galloway sent a letter on May 23, 2024 to Julie Kane (Chairperson) and Christiana Obiaya (CEO) of Heliogen. It started with:

“We have been shareholders of Heliogen, Inc. (the “Company” or “Heliogen”) for almost a year. We are quite disappointed with the performance of the Company’s common stock, which is -99.9% in the past year.”

2024-05-23 – SC 13D
2024-05-22 ATRA ATARA BIOTHERAPEUTICS INC Adiumentum Capital Fund I LP 6.7% -69.0%
  • Adiumentum owns approximately $5.6M of ATRA stock and intends to engage with management
2024-05-22 – SC 13D
2024-05-21 BHR BRAEMAR HOTELS & RESORTS INC Al Shams Investments LTD, Said Wafic Rida 9.8% -26.9%
  • Had originally filed a 13-G (i.e. passive), but have since decided to engage management on potential ways to increase shareholder value
2024-05-21 – SC 13D, 2024-05-21 – SC 13D
2024-05-21 BZFD BUZZFEED INC Vivek Ramaswamy 7.7% 3.4%
  • Investors were excited to see Ramaswamy’s activist push into Buzzfeed as the stock jumped more than 50% in pre-market trading
  • Plans to discuss “numerous operational and strategic opportunities to maximize shareholder value, including a shift in the Company’s strategy” with the board/management.
2024-05-21 – SCHEDULE 13D

 

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.

 

LATEST PROXY CONTEST FILINGS

TICKER COMPANY MEETING DATE LATEST PROXY SUMMARY TARGET FILINGS ACTIVIST FILINGS
BHR BRAEMAR HOTELS & RESORTS INC 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 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 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
May 31 – DEFA14A
May 31 – DEFC14A
May 24 – DEFC14A
May 20 – PREC14A
May 20 – DEFA14A
May 10 – PREC14A
Apr 29 – DEFA14A
Apr 24 – DEFA14A
F9 INVESTMENTS LLC
May 28 – PRRN14A
May 20 – PREC14A
MASI MASIMO CORP TBD 2024-05-31 – 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 – DEFA14A
May 31 – PREC14A
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
May 10 – DFAN14A
Mar 25 – DFAN14A
MFIN MEDALLION FINANCIAL CORP 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
May 28 – DEFA14A
May 24 – DEFA14A
May 22 – DEFA14A
May 21 – DEFA14A
May 20 – DEFA14A
May 13 – DEFA14A
Apr 29 – DEFC14A
Apr 18 – PREC14A
ZIMCAL ASSET MANAGEMENT, LLC
May 30 – DFAN14A
May 29 – DFAN14A
May 29 – DFAN14A
May 28 – DFAN14A
May 24 – DFAN14A
May 21 – DFAN14A
May 21 – DFAN14A
May 16 – DFAN14A
May 13 – DFAN14A
May 13 – DFAN14A
MRC MRC GLOBAL INC 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 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
Apr 29 – DEFA14A
SHAH CAPITAL MANAGEMENT
May 20 – DFAN14A
May 13 – DFAN14A
May 08 – DFAN14A
May 07 – DFAN14A
May 06 – PREC14A
May 06 – DFAN14A
SPRU SPRUCE POWER HOLDING CORP 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
May 31 – PRRN14A
CLAYTON PARTNERS LLC
Apr 18 – DFAN14A
Apr 17 – PREC14A
WT WISDOMTREE INC 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
May 23 – DEFA14A
May 23 – DEFA14A
May 13 – DEFA14A
May 06 – DEFA14A
Apr 30 – DEFA14A
Apr 29 – DEFC14A
Apr 29 – DEFA14A
Apr 29 – DEFA14A
Apr 19 – PREC14A
ETFS CAPITAL LIMITED
May 28 – DFAN14A
May 21 – DFAN14A
May 14 – DFAN14A
May 06 – DFAN14A
May 03 – DFAN14A
May 03 – DEFC14A
Apr 30 – PRRN14A
Apr 18 – DFAN14A
Apr 17 – PREC14A

 

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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