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Breaking news and more: Your media center for shareholder activism and corporate governance.

Bill Ackman-backed Canadian Pacific Railway Ltd. (CP) will no longer pursue a proxy fight to replace directors at Norfolk Southern Corp., (NSC) according to a source.  The Canadian railway's aggressive takeover strategy has yielded poor results thus far in its three-month campaign, faced by intense opposition from its American peer as well as resistance from other shippers, more Class 1 railways, and politicians.  Canadian Pacific will instead consider submitting a proxy resolution, said the source, a less confrontational tactic that would seek support from shareholders to influence Norfolk Southern to enter merger discussions.  The railway has reportedly been surprised by the level of opposition to the deal, which has significantly reduced the likelihood of success with a hostile takeover.

Bill Ackman's Pershing Square Capital Management has released a video called “The American Dream Denied,” which tells the stories of people claiming to have lost thousands of dollars working as distributors for Herbalife (HLF), which sells weight-loss shakes and other supplements. The interview subjects, most of whom are Spanish-speaking, make a case for Ackman's contention that Herbalife is a pyramid scheme that takes advantage of immigrants and the poor. The interviewees support Ackman's claims, noting that they were told that the way to make money in Herbalife is to recruit people, not sell products. Pershing Square's activist campaign, begun in 2012, has included hiring outside firms to investigate Herbalife. Herbalife denies it is a pyramid scheme, and investigations by the Manhattan U.S. attorney’s office and the New York field office of the Federal Bureau of Investigation have failed to uncover evidence to support bringing charges.

Lawrence Seidman will back the remaining Malvern Bancorp Inc. (MLVF) director up for re-election, “gratified” that two of the company’s proposed directors have stepped down following his opposition.  Seidman had stated in a recent regulatory filing that he would withhold support from Malvern's slate of directors, and wanted the $727 million-asset company to eliminate staggered terms so directors are elected annually.  Seidman owns roughly a 5.4% stake in Malvern.  The company since announced that two of the directors—Claire Hughes Jr. and Robert Willson—would resign before the Feb. 17 meeting.  In response, Seidman said in an updated regulatory filing that he will support the re-election of Ralph Packard, who had not resigned.

American International Group Inc., (AIG) which has holdings in over 100 hedge funds, is planning to cut that number to 50 or less, according to sources. The insurer had about $11 billion in hedge funds as of the third quarter, and returns on the holdings have flopped in recent months. CEO Peter Hancock said the company plans to lower the allocation, but did not specify which funds it would stick with or how many. “We had a very negative experience in hedge funds,” Hancock declared at the Jan. 26 investor presentation. Shifting the allocations will “lead to a much better return on risk and especially return on capital,” he said. Hedge funds have underperformed the Standard & Poor’s 500 Index for seven years, and money managers such as BlackRock Inc. have chosen to shut down some strategies. MetLife Inc., however, on Feb. 4 defended private equity and hedge fund investing as effective over time, despite disappointing fourth-quarter results.

Sunshine Financial in Tallahassee, Fla., has agreed to name a new board member in exchange for a truce with Stilwell. The $152 million-asset company has named Corissa Brigli a director, and will also appoint Brigli to the board of Sunshine Savings Bank, after approval of its conversion to a state-chartered bank from a federal thrift charter. Brigli was nominated by Joseph Stilwell, who owns a 9.4% stake in Sunshine. Stilwell last year demanded Sunshine increase its rate of stock buybacks. In exchange for Sunshine's appointment of Brigli, Stilwell agreed to refrain from opposing management proxy proposals, seeking a sale of the company, or attempting to place additional directors on the board. Brigli is employed by Stilwell's firm, the Stilwell Group, to evaluate and monitor its investments in community banks.

For the second time this year, Starboard Value plans to reduce its holding in Darden Restaurants (DRI). The firm recently held a 9.1% stake and was once Darden's largest investor; but the latest move would lower its interest to roughly 5.15%, according to a federal regulatory filing. Starboard began selling shares in January after its CEO, Jeff Smith, was re-elected as Darden's chairman in November. Smith has said he plans to stay active in his leadership at Darden and remain a major shareholder. Starboard earned recognition as an aggressive activist investor in October 2014, when it overhauled Darden's board of directors and ousted its CEO. Darden's largest shareholder will become Vanguard Group, with an 8.5% ownership claim, after Starboard pares its holdings in the restaurant firm.

Abstract News © Copyright 2016 INFORMATION, INC.

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Yelp's Due for an Activist Review
" Bloomberg View (02/08/16) Lachapelle, Tara"

Shares at Yelp Inc. (YELP) have plummeted over the last year, but its database and app continue to pull in traffic; and the figures are even growing. Analysts have been unable to agree on whether the stock will jump or plunge further, and the company appears positioned for the kind of activist intervention Carl Icahn is famed for. Yelp's CEO Jeremy Stoppelman decided not to sell the company last summer though its valuation has since decreased and the company is looking to fill its CFO position, announced last week. The disconnect at the company is the kind an activist could look to repair; and given Yelp's management transition, low valuation, and impressive user base, it is plausible that a hedge fund could eye the company with interest. Yelp shareholder Eminence Capital owns a 6% stake in the company and has already led activist campaigns elsewhere, pushing for the merger of Men's Wearhouse and Jos. A. Bank in 2014.

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Fink Backs New Breed of Shareholder Activism
" Financial Times (02/05/16) McLannahan, Ben"

BlackRock head Larry Fink in a letter to CEOs at leading companies in the United States and Europe urged them to listen to "activists who focus on long-term value creation" rather than investors seeking higher dividends or larger share buybacks. That sentiment is being echoed by a new breed of activists, who, like regulators, want companies to simplify. Hudson Executive Capital has invested in CIT Group (CIT), Lion Point Capital is circling Ally Financial (ALLY), and Paulson & Co. and Icahn Associates are both prodding at American International Group (AIG), but none of the activists is specifically calling for bigger cash returns. Instead, they're calling for the big financial services companies to streamline. The sentiment comes in the wake of regulatory and capital burdens imposed on "systemically important" financial institutions by the Federal Reserve.

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Sharp Shows Japan Inc. May Be More Open to Foreign Interest
" Reuters (02/05/16) Umekawa, Takashi; Emoto, Emi"

After recent urging from an activist investor to be more transparent about its decision process, Japan’s Sharp Corp. has chosen Taiwan’s Foxconn as its preferred suitor—which would result in the biggest foreign takeover of a Japanese tech company. Last week, Effissimo Capital Management sent the struggling electronics maker a letter asking it to explain how it would decide between two offers. Foxconn, known formally as Hon Hai, won out with a deal worth roughly $5.6 billion. According to sources, people close to Prime Minister Shinzo Abe approved of the idea that a Foxconn deal would help boost foreign direct investment, which is a growing priority in Japan. The country’s efforts to attract foreign investment likely influenced Sharp’s board in picking the foreign offer. "Sharp's decision to choose Hon Hai over a state-backed fund sent a message to foreign investors that it left the decision to the market," said Takatoshi Itoshima, chief portfolio manager at Commons Asset Management. "The move can boost investor confidence ... foreign investors may increasingly feel it's worth investing in the Japanese market."

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U.S. Banks Targeted by Activist Investors on Merger Wave Hopes
" Reuters (02/05/16) Flaherty, Michael; Stone, Mike"

Activist investors have tended to avoid banks in the past due to their size, complexity, and amount of regulatory scrutiny they attract; but the sector is growing increasingly attractive as certain factors are expected to drive more mergers. Last year saw 22 activist campaigns aimed at banks, up from just eight in 2009, based on Thomas Reuters Activism data. More recently, Hudson Executive Capital announced it had amassed a $56 million stake in Comerica Bank, a lender with $71 billion in assets under management. Some believe low interest rates, lagging returns on equity, and strict regulations will encourage banks to consolidate and that buyers will be willing to pay a significant multiple to a bank's tangible book value. Betting on banks is not without risk, but the potential profits are tempting—especially as bank deals have picked up just in the last year.

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Bank of America's Valuation Is Seen as Invitation for Activists
" Bloomberg (01/29/16) Son, Hugh"

Bank of America Corp. (BAC) has been raised from buy to sell by an analyst, who said in a research note Friday that the company’s low valuation and poor efficiency increase the likelihood of shareholders demanding a spinoff or other restructuring.  “With the stock trading at a significant discount to tangible book value, the chance for an event increases -- whether it's a restructuring, spinoff, or some sort of other action to improve their lousy efficiency,” wrote Mike Mayo, analyst at CLSA Ltd.  He added that although an activist is an outside shot, increased shareholder pressure is likely.  The company is trading below tangible book value which suggests investors either don't believe the firm's assets are worth what it says, or they doubt management's ability to generate returns above the cost of capital, said Mayo.  Bank of America's market capitalization is $142.5 billion, which would make it difficult for any hedge fund to take a sizable stake. Regulators also have ultimate control over whether banks can increase dividends and buybacks, which is another factor that makes the company less attractive for activists.

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Hunt or Be Hunted Is New Face of European Investor Activism
" Bloomberg (01/29/16) Webb, Alex; Andresen, Tino; Magnusson, Niklas"

Sweden's Cevian Capital and other European activists typically refrain from the public proxy fights employed by their American peers, but they do follow a similar pattern of amassing a sizable stake in a company and pressing for change -- privately at first but going public if necessary. Cevian has accumulated the second-largest stake in German industrial conglomerate Thyssenkrupp AG and Swiss engineering giant ABB Ltd., for example; and if executives fail to execute its demands, it will launch what insiders call “The Hunt.” This strategy entails turning investors against management in order to achieve certain objectives. Cevian's campaigns demonstrate how activism is changing European boardrooms: in the past two years, 56% of activist campaigns for board seats have been successful, up from a bit more than a third over the past 15 years, according to FTI Consulting.

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Abstract News © Copyright 2016 INFORMATION, INC.

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Company Search

Company SearchInsert a ticker and see updated financial quote summary, company description and detailed information on any live or recently exited activist campaigns, including the activist’s investment thesis. This feature takes you chronologically through the activist’s 13D filings detailing increases or decreases in holdings and change in average cost per share and summarizing any activist measures taken. Additionally, the chart at the bottom of the page shows the stock price performance and its reaction to each 13D filing. For quick reference, there are links to the activist’s profile and returns history and any letters and agreements the activist has entered into in connection with this investment.

Activist Profile

Activist Profile View a detailed analysis of the activist histories of the 40+ top activists – updated and expanded on a continuous basis. Get detailed analysis on: (i) the returns for each activist investor, including: (A) which activists have outperformed the S&P500 on their individual and aggregated 13D filings, (B) how their returns on live filings compare to their returns on exited filings, and (C) how their returns on filings change when they take significant activist measures; (ii) the average holding periods for each activist investor on all filings, exited filings, live filings and filings where they have taken significant activist measures; and (iii) what activist measures were taken, when they were taken and how the underlying stock reacted to the filing.

This month’s Activist Report: Featured Article

2015/2016: Activist Opportunity, Not Obituary

Previously Featured:

2015 Year-End Activist Statistics

Search Activist Campaigns

Search live and exited filings by Investor, Dates, Market Caps, Industry and Type of Activism (i.e., Proxy fights for board seats, Posion pill issues, Spinoff, etc.). Sort results by date, investors, return on investment, etc. Easy access to link to detailed analysis of activist campaign and any letters or agreements entered into in connection therewith.

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Search FilingsSearch our list of historical 13D Monitor filings. The list contains approximately 4.000 material filings since 2006 and also includes the associated report.

Activist Letters and Agreements

Search our library of activist letters and agreements to find letters sent by activists to Companies, Settlement Agreements, Standstill Agreements, etc. Search this library by filer, company, type of letter or agreement, or any combination thereof.

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