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13D Monitor Real-time Activist Newsfeed


Herbalife Ltd. (HLF) said Friday it had received a request from the U.S. Securities and Exchange Commission (SEC) for documents and information related to its compliance with anti-corruption laws in China. Hedge fund manager Bill Ackman, who had accused Herbalife of being a pyramid scheme, said a couple years ago that the company was breaking direct-selling laws in China, its fastest growing market. Herbalife has been probed by various regulatory bodies over the past two years and in July agreed to pay $200 million to the U.S. Federal Trade Commission. The dietary supplements maker on Friday also estimated that it fell way short of its net sales and volume forecasts in the fourth quarter, and lowered its fiscal 2017 forecast for net and adjusted profits due to the strong dollar. Herbalife's shares tumbled 3.4% to $51.31 in early trading.

Large investors in Pearson (PSO) are questioning the role of John Fallon as CEO after the education group posted a drastic profit warning on Wednesday, leading to a 30% plummet in the shares. Fallon has begun meeting with top shareholders this week to review why sales declined so fast in the end of 2016, after assuring investors just in November that the company was doing well and he was tackling the challenges. On Wednesday, Pearson revealed that a 30% drop in its U.S. higher education division in the last three months of 2016 meant its underlying profitability this year would fall £180 million short of projections. Some investors warned that an activist investor may step in and push for a split of the business unless Chairman Sidney Taurel is prepared to remove Fallon as CEO, which several leading shareholders said would not come as a surprise.

U.S.-based Elliott Management is suing Japan's Hitachi over its purchase of a majority stake in Ansaldo STS. The hedge fund, which itself owns 30% of the Italian railway-signal maker, claims Hitachi underpaid for its 40% stake by colluding with the seller, Finmeccanica. The low-ball price allegedly was obscured by Hitachi simultaneously overpaying for a different firm with the same owner. Hitachi has denied the claim and ejected an Elliott-appointed director from the Ansaldo board for “excess of diligence.” Italian law allows minority shareholders to appoint directors but, ironically, the law Hitachi invoked to remove Elliott's representative was designed to protect minority investors from poor governance. The case is likely to be settled by the European Court of Justice, as market regulator Consob agreed there was collusion.

Bank of New York Mellon Corp. (BK) posted fourth-quarter profit of $870 million, up from $693 million a year earlier. The country's oldest bank has benefited from a sustained cost-cutting campaign launched in 2014 under pressure from Trian Fund Management LP. Shares are up 11% since Dec. 2, 2014, when the bank added Trian's Edward Garden to its board. Trian had acquired a position in the company that June and sought cost reductions. In October 2014, BNY Mellon executives announced plans to eliminate $500 million in expenses through 2017. Trian has been a positive influence, according to UBS analyst Brennan Hawken. "Investors used to love to deride BNY, calling them '50 cents,'" he said. "Earnings every quarter was 50 cents. Since then, we've seen steady growth in earnings per share." The bank's revenue growth has surpassed increases in expenses, producing better margins and operating leverage for three years in a row, Hawken noted. Finance chief Thomas Gibbons added that the bank's asset-management arm likely will generate greater performance fees this year and that he expects revenue growth to outpace expenses again in 2017.

Voce Capital Management LLC is pushing for a merger between Rudolph Technologies Inc. (RTEC) and Nanometrics Inc. (NANO), which would spur cost-cutting and revenue growth through cross-selling to each other's customers. Voce owns about 1% of each company. In a letter to investors, Voce founder J. Daniel Plants said both companies have solid management and have been among the fund's best-performing stocks over the past year. However, he stressed that a combined company would be better equipped to handle large companies and possibly more deals in the future. "Just like chocolate and peanut butter, sometimes two great things are even better together," Plants wrote. A deal between the two companies seems to have stalled due to social issues among directors and management teams, but if a deal does not happen, Plants said he would seek to "hold accountable the individuals whose personal priorities eclipsed the interests of shareholders."

CSX Corp.'s (CSX) shares jumped the most on record following news that Canadian Pacific Railway Ltd. (CP) CEO Hunter Harrison has partnered with investor Paul Hilal to shake up the railroad company.  Harrison announced his retirement from Canadian Pacific on Jan. 18, and his joint effort with Hilal would create more industry boardroom drama less than a year after he and investor Bill Ackman abandoned their attempts to take over Norfolk Southern Corp. (NSC).  "Hunter Harrison improves margins, and eastern rails CSX and NSC still have the weakest margins in the industry," said Susquehanna Financial Group analyst Bascome Majors.  CSX shares climbed 18% to $43.60 at 11:46 a.m. in New York following an earlier increase of 19%, marking a record intraday gain.  Meanwhile, shares rose 4.1% for NSC and 4.6% for Canadian Pacific.  According to Majors, there is a potential two-to-four-year "window for an outside CEO to run CSX while the rest of the C-Suite becomes more seasoned for the role."  Meanwhile, Cowen & Co. analyst Jason Seidl said, "His reputation of being the most sought after manager in the North American railroad industry could make it very difficult for CSX to refute Harrison's desire to run its franchise."  With CSX's next annual meeting in May, observers say there could be a months-long effort by Harrison and Hilal to court investors.

Amber Capital says the price of a buyout offer by France's Lactalis undervalues Italy's Parmalat, and it won't be tendering its 3% stake. Lactalis has launched an offer on the 12.26% of Parmalat it doesn't already own. Lactalis, a private company, hopes to eventually delist Parmalat. Lactalis has proposed purchasing Parmalat shares for 2.8 euros each. "We believe the price of Lactalis' offer is too low and does not reflect the real value of Parmalat," says Amber Capital portfolio manager Arturo Albano. A group of retail shareholders in the Azione Parmalat association also is questioning the bid. Parmalat is in an ongoing dispute with Citigroup, and minority shareholders could lose out on any settlement if the shares are sold to Lactalis before a resolution. "On Dec. 29 we asked [market watchdog] Consob to request Parmalat to provide additional information on the outlook for the next 2-3 years and on developments related to its dispute with Citi which includes a significant damage request," Albano said. Furthermore, Parmalat has invested one billion euros in the past three years in countries such as Brazil, Mexico, and Australia, and has yet to reap the rewards of those investments.

Hunter Harrison, the railroad veteran who announced his early departure from Canadian Pacific Railway Ltd. (CP) this week, is joining with an activist investor in an attempt to shake up management at rival railroad CSX Corp. (CSX) Harrison said he is completing an agreement to team up with Paul Hilal, who left William Ackman’s Pershing Square Capital Management LP to launch his own fund last year. They are expected to try to put Harrison in a senior management position at CSX, which CP reportedly approached about buying last year and in 2014. Hilal’s fund, Mantle Ridge LP, has reportedly raised more than $1 billion for a single investment, with investors having committed to locking up their money in the fund for five years. "We are close to a deal to potentially look at some opportunities," said Harrison.

Kathmandu (KMD) co-founder Jan Cameron has been revealed as one of the forces behind the shareholder trying to reconfigure the board of infant formula maker Bellamy's Australia (BAL), whose share price has tanked 70% in the past month. The group has released documents tying Black Prince Private Foundation to a private charity owned by Cameron and her attorney, Rodd Peters. Bellamy's is preparing for a general meeting in February where shareholders will vote on a proposal to revamp the board. Black Prince, which has a 14.5% stake in Bellamy's, is trying to roll four of five board members. Supporters of Black Prince have so far remained anonymous. The charity, the Elsie Cameron Foundation, was founded in Cameron's mother's name to fund environmental works. It receives all funds Black Prince collects from Bellamy's through dividends or share sales. The arrangements were discovered by Bellamy's after it issued Black Prince with a notice to disclose its relevant corporate interests. Cameron called the link between her and Black Prince tenuous and said she has no financial interest in the group and could not control it.

International Healthway Corp. (IHC) has implored investors to "vote for continuity" and give it more time to help its performance. The move comes as the developer faces shareholder revolt as well as unwanted scrutiny from Quarz Capital Management. IHC released a statement to the Singapore Exchange on Jan. 18, refuting a claim made by the requisitioning shareholders that the company's performance is "worrying." IHC also responded to the open letter from Quarz, which had called out the company's management for "lack of strategic focus and several execution issues" and suggested ways for IHC to boost its poor cash flows and lower debt costs.

Ancora Advisors LLC has delivered a letter to shareholders of Edgewater Technology Inc. (EDGW) in regard to its campaign to remove four board directors and replace them with its own nominees. Ancora, which owns a 9.2% stake in the company, denounced Edgewater's attempt to mischaracterize the investor in its own recent letter to shareholders. Ancora said it attempted to reach a compromise with the board in private discussions spanning many months, but after the board's repeated failure to engage in a constructive manner, it has no choice but to resort to launching a consent solicitation. "It is time incumbent directors are held accountable," the letter states. Edgewater's long-term underperformance, excessive executive compensation, and poor corporate governance practices are symptoms of entrenched incumbent directors who have failed to consider shareholders' interests, it said. In contrast, Ancora's "highly-qualified candidates, who are fully aligned with stockholders' interests, bring the fresh perspective, skill sets, and experience necessary to significantly improve Edgewater's financial and operating performance," it said.

The proxy adviser Glass, Lewis & Co. announced on Jan. 18 that Bob McCormick, chief policy officer, is leaving the firm to join CamberView Partners, which advises public companies on shareholder activism. McCormick has served as an influential voice on corporate governance at Glass Lewis, and his successor has not been named. His departure follows that of Chris Cernich, a former executive at the rival proxy adviser Institutional Shareholder Services, who was hired in November by the public relations firm Sard Verbinnen & Co.

TCS Capital Management is calling for Central European Media Enterprises (CETV) to retain an investment bank to conduct a sale process. It argues the company's assets in central and eastern European markets and its robust financial performance make it an attractive candidate. TCS has been in discussions with the company regarding its poor stock price performance and ways to maximize shareholder value, the investor said in a filing Tuesday. It has also proposed revamping the broadcaster's board. TCS held 13.4% ownership in the company as of Jan. 12, according to the filing.

Joe Mullany has been replaced after four years as chief executive officer of Detroit Medical Center. The position will be taken over by Tony Tedeschi, a former chief executive officer of Tenet Healthcare's (THC) four-hospital Chicago market. The replacement comes amid a push by Tenet, DMC's parent company, to cut costs and streamline structure. Sources say that Tenet is in the process of restructuring its national hospital operations and replacing Mullany is seen as an effort, in part, to flatten and streamline corporate operations to cut costs. Tenet is also reportedly under pressure from Glenview Capital Management to improve its earnings, which have steadily dropped the past several quarters to nearly 8% in the third quarter ended Sept. 30, down from 9.9% earlier in 2016. Glenview requested two board seats for its executives last year, with two additional independent board members added.

Shares of NRG Energy Inc. (NRG) jumped 6.2% in premarket trade on Jan. 17, following a disclosure by Elliott Associates that it has taken a 6.9% stake in the energy production and distribution company. Elliott also disclosed an agreement with Bluescape Resources to create an investor group owning 9.4% of NRG's shares outstanding. According to Elliott's filing with the U.S. Securities and Exchange Commission, NRG's stock is "deeply undervalued," and there are "numerous opportunities to significantly increase shareholder value," including operational and financial improvements and strategic initiatives. Furthermore, Elliott is considering nominating one or more people to NRG's board.

Directors of Christopher & Banks (CBK) terminated CEO LuAnn Via "without cause," according to a filing with securities regulators. The Plymouth, Minn.-based women's apparel retailer also announced disappointing holiday sales results. The news pushed down the company's shares 32% during the first half-hour of trading on Jan. 17. Via will receive $850,000 in severance, as well as other payouts for accrued vacation and other incentives. Joel Waller, former CEO of The Wet Seal and Wilsons Leather, will serve as interim CEO while the company searches for a permanent successor. Furthermore, Lisa Wardell resigned as board chairman, and Kent Kleesberger is her replacement. The leadership changes follow an overhaul of the company's board last year, including the addition of Macellum Capital Management's Jonathan Duskin, who had argued that the board was "heavily skewed" to Minneapolis-area business people who do not have enough background in retail.

Jana Partners fund manager Barry Rosenstein recently purchased a large stake in the New York-based pharmaceutical company Bristol-Myers Squibb (BMY), according to a source.  The investment, which is a top position for the fund, was disclosed privately to Rosenstein's investors in a risk report, the source said.  Jana Partners frequently has launched campaigns and proxy contests, suggesting that one could be forthcoming, especially considering that Rosenstein has not initiated a new campaign in several months.  An activist could launch a contest at Bristol-Myers to press for strategic options ahead of a Feb. 2 deadline to nominate dissident director candidates for the company's 2017 annual meeting, expected in May.  Steve Chesney, analyst at Atlantic Equities, said Rosenstein or another activist fund could target what he sees as Bristol-Myers' over-concentrated portfolio and its over-focus on one drug, blockbuster cancer therapy Opdivo.  He suggested the company could be urged to make acquisitions or invest more heavily in business development so it can become more diversified.  An activist also could pressure Bristol-Myers to be acquired by another drug company, as its large immune-oncology drug portfolio, led by Opdivo, could make it an attractive candidate. Leading global pharmaceutical firms Pfizer (PFE), Merck (MRK), Johnson & Johnson (JNJ), and Novartis (NVS) are all capable of acquiring Bristol-Myers, but it is uncertain whether they would be interested.

BlackRock Inc. has informed at least 300 large U.K.-listed companies that executive pay should be tied to long-term performance and that it should only be increased at the same level of a company's overall workforce. The world's largest asset manager sent letters to companies in the FTSE 350 Index to assist their boards of directors and remuneration committees as they review corporate pay framework. BlackRock placed special emphasis on companies that will be submitting their remuneration policy to a binding shareholder vote this year. Binding votes give shareholders the final say on executive pay instead of the company's directors. Roughly 50 percent of FTSE 350 companies will face binding votes in 2017. Where it determines executive pay is not aligned with the best long-term interests of shareholders, BlackRock plans to take that into consideration when it votes for the re-election of members on a company's compensation committee.

Alliance Trust has outlined details of a strategic overhaul to boost its investment performance, responding to pressure from Elliott Advisors. The Dundee-based financial services group said last month it would shift responsibility for investing its £3.3 billion equity portfolio to multiple investment managers, and it appointed Willis Towers Watson as the overall investment manager. On Monday, Alliance Trust confirmed Willis Towers Watson had chosen eight equity managers from the United States, United Kingdom, and Canada. Under the new structure, each manager will choose 20 stocks, which will make up the combined Alliance Trust portfolio. Lord Smith of Kelvin, chairman of Alliance Trust, said the new investment strategy would deliver stable returns for shareholders. Alliance Trust investors are slated to vote on the proposed restructuring at a general meeting on Feb. 28. Elliott—the company's biggest shareholder, with a roughly 19% stake—launched a campaign at Alliance last year, criticizing the group's lackluster performance, excessive costs, and unprofitable subsidiaries. In April 2015, Elliott led a shareholder rebellion over the high compensation of the company's former CEO, Katherine Garrett-Cox. Alliance agreed to appoint two of three independent directors nominated by Elliott, before Garrett-Cox departed in 2015.

Quarz Capital Management has stepped into a shareholder dispute at medical property developer International Healthway Corp (IHC), backing the removal of the current directors and calling for new strategies. In an open letter to the board of IHC, Quarz attributed the drastic decline in IHC's share price to the company's "overly aggressive asset acquisition strategy, lack of strategic focus and several execution issues" as well as overvaluation during its initial public offering. By overhauling the board and instituting a new strategy, IHC's share price can gain 40% in the near and mid-term, Quarz predicted. The fund, which has valued IHC's assets at $515 million, is recommending that IHC sell or list as a real estate investment trust its 12 Japan nursing homes to generate asset management income. It is also asking IHC to recruit a joint-venture partner to develop the Kuala Lumpur land bank into a medical hub with serviced residences and to explore an IPO of the China healthcare assets. Quarz said it will vote to replace the entire board at an extraordinary general meeting on Jan 23. This meeting was initiated by two shareholders from Oxley Holdings, who cited "worrying performance and developments" at IHC. Quarz said it had been in touch with Oxley but that its report was independent from them.

Pandora Media Inc. (P) said it would cut 7% of its workforce by the end of the first quarter and projected strong fourth-quarter results, sending shares of the Oakland, Calif.-based Internet-radio company soaring. The job losses do not include employees from Ticketfly, the ticket purveyor it acquired for $450 million in October 2015 to better compete with Spotify and Apple Music (AAPL). Pandora said its fourth-quarter revenue likely will come in at $374 million, or higher than its initial projection of $362 million. Corvex called for a sale in May.

On Jan. 11, Oasis Management Co Ltd. entered into a Board Representation and Standstill Agreement with Stratus Properties Inc. (STRS) that allows for the addition of Ella Gendel, an Oasis employee, to the board. Gendel will be a Class III director with a term expiring at the 2019 annual shareholders meeting. Oasis has amassed a 13.4% stake in Stratus Properties Inc. (STRS), according to an SEC filing. As per its agreement with Stratus Properties, Oasis will not raise its stake to beyond 17.5% of the outstanding common stock; nominate directors to the board; or submit shareholder proposals, among other conditions.

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Investor Jeffrey Ubben on Putting Money in Fox, UTA and Sundance Movies
" Hollywood Reporter (01/20/17) McClintock, Pamela"

ValueAct's Jeffrey Ubben is becoming increasingly involved in Hollywood. Ubben sits on the board of 21st Century Fox (FOXA), and his San Francisco-based hedge fund owns 7% of voting shares. In 2015, he purchased a 17% stake in UTA. Ubben and producer Russell Levine also run the boutique film shingle Route One Entertainment. Asked in a recent interview why he keeps his involvement in Route One quiet, he says: "I have a day job running ValueAct. But I've been doing more and more in Los Angeles. Frankly, I think content is king. I love character-driven literature, movies, and TV shows. On investing in Fox, Ubben notes: "The key for us is that [CEO] James Murdoch is in his early 40s, and everybody else running a media company—whether Les Moonves, Bob Iger, or Jeff Bewkes—are in their mid-60s. I felt very good about James and Lachlan [Murdoch]. We've worked aggressively to form a direct relationship with customers and move away from affiliate fees and … linear cable."

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Samsung Leads Elliott Outside Its Comfort Zone
" Reuters (01/19/17) Mak, Robyn"

Samsung Group is pulling Elliott out of its comfort zone, with a fair chance the U.S.-based hedge fund will not be able affect desired changes at the South Korean giant. In October, Elliott disclosed a 0.6% interest in Samsung Electronics and pressed for an overhaul of the company, which trades lower than Apple and other competitors. Restructuring promises to improve shareholder returns, which would mollify investors; but recent events have created much uncertainty in Elliot's campaign. On Jan. 19, a South Korean court dismissed a warrant to arrest Samsung Group's de factor leader Jay Y. Lee, who is accused of bribery, amid an ongoing probe. Moreover, the December impeachment of President Park Geun-hye has led the country into turmoil, with the public rallying against the close relationships between business and politicians. Elliott could still prevail, however, as Samsung shares have climbed 15% since it unveiled its holding; and today's scandal could lead to corporate reform benefiting investors. Its stake in Samsung Electronics is currently valued at $1.2 billion.

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Kraft Heinz Plans to Build a New Food Giant
" Fortune (01/19/17) Colvin, Geoff"

The strategy of Kraft Heinz Company (KHC) under the management of 3G Capital, the private equity firm overseen by Jorge Paulo Lemann, may have global implications, because all evidence suggests that 3G is just getting started in an effort to transform the vast U.S. food industry sector. Kraft Heinz came into being 18 months ago when Heinz bought Kraft Foods Group, a mostly U.S. grocery manufacturer that in 2012 had separated itself from a collection of mostly non-U.S. snack businesses now known as Mondelez Interna­tional (MDLZ). Heinz had been bought and taken private in 2013 by 3G Capital, with considerable financing from Warren Buffett. When it then bought Kraft and merged it with Heinz in 2015, 3G took the combined business public as Kraft Heinz. At the heart of the 3G management model is meritocracy, broadly defined. Every employee must justify his existence every day. Budgeted costs also are evaluated unsparingly every year, or more often, and are eliminated if they are no longer judged worth incurring. Wall Street is betting that Kraft Heinz will make a major acquisition soon. Analysts say the 3G pattern has been "buy, squeeze, repeat." The 3G managers develop extraordinary operating skills and greatly increase the value of every company they buy, but they are not great innovators. They achieve growth through acquisitions—not organically. Some say a central feature of this model is that it cannot work forever, as it builds value only by buying more companies.

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Study: Board Concerns Over Investor Sentiment and Shareholder Activism Rising
" PRWeek (01/19/17)"

Boards are growing increasingly concerned about shareholder activism, according to a survey by Clermont Partners. Fifty-two percent of 100 investor relations officers (IROs) polled reported increased board interest related to shareholder activism and investor sentiment. Eighty percent said they are concerned because they cannot explain sudden share-price fluctuations. The survey was conducted following William Ackman's engagement of Chipotle (CMG) and other high-profile campaigns. As boards become more involved, they are likely to improve communication with shareholders, Clermont founding partner Victoria Sivrais believes. "Enhanced engagement creates better dialogue and more shareholder value," she says. Twenty percent of respondents said they want to boost stock surveillance efforts; 25% said such efforts are "futile." Surveillance provides a "viewpoint as to what's happening over a period of time," according to Sivrais. "It doesn't tell what moves the stock at that moment." She notes that companies are focusing more on predictive analytics in stock surveillance. Reaching out to investors and understanding their perspective is an important component of predictive analytics. The survey also found that 80% of respondents view analysts as the most effective way to understand the investment community. Meanwhile, 30% of IROs said buy-side meetings at sell-side conferences are poorer quality than before; and 25% said there has been an uptick in buy-side participation in earnings conferences.

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Proxy Access Increases at MSCI USA Companies, Paper Reveals
" IR Magazine (01/18/17) Holt, Andrew"

A paper by MSCI ESG Research, "Proxy Access—2017 Engagement Focus," indicates that proxy access was a huge success story in the effort to advance shareholder rights during the 2015 and 2016 AGM seasons. The paper shows that over the two-year period, adoption rates rose from less than 1% to 41.2% of U.S. incorporated companies in the MSCI USA Index. However, companies that already have introduced three or four other board accountability shareholder rights are more likely to have adopted proxy access provisions, and companies with entrenched boards are among the least likely to have adopted proxy access. Furthermore, the report indicates that shareholder rights diverge widely, even among the biggest U.S. companies, and that the ability of shareholders to hold underperforming boards to account has fallen short of global norms. "U.S. institutions see this as a corporate governance development, where non-U.S. institutions see it as a global norm," says Alan Brett, head of corporate governance ratings research at MSCI ESG Research, adding that it will take time to fill the gap in overall board accountability and shareholder rights between the U.S. market and global standards. "The current campaign is on proxy access; a few years ago it was on classified boards. There will be further improvements down the line as investors try to bring U.S. norms up to the global standard. Investors are fighting one battle at a time. This isn't going to be solved overnight."

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Canada: An Age of Shareholder Empowerment
" Mondaq (01/17/17) Yoo, Jenny"

A corporate directors survey by PricewaterhouseCoopers LLP presents current trends in investor influence and their impact on governance practices of boards and management teams.  The survey, titled "The Swinging Pendulum: Board Governance in the Age of Shareholder Empowerment," showcases the increasing influence of investors and board sentiment in the "new age of shareholder empowerment."  According to the survey, there has been an increase from 11% in 2012 to 18% in 2016 in the use of investor recommendations as a consideration in the recruitment of new members. Existing board members' recommendations, search firms, and management recommendations, however, remain the primary sources of information for picking new directors.  Ninety-six percent of respondents said that board diversity is "at least somewhat important," while 83 percent indicated that there are impediments to increasing board diversity.  Such impediments include a limited pool of diverse director candidates.  The survey highlighted research that found that Fortune 500 companies with higher representations of female board members "attained significantly higher financial performance, on average, than those with the lowest representation of female directors." The survey also found that direct communications between board members and investors has grown in prevalence during recent years.  Respondents indicated that boards are responding to investor pressures to decrease emphasis on short-termism and focus instead on building a framework for long-term shareholder value creation.

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The Stock Rally Isn't Doing Much for Herbalife
" Bloomberg (01/18/17) Townsend, Matthew"

In contrast to the U.S. equity market rally since the election of Donald Trump, Herbalife Ltd. (HLF) is down 4% since the Nov. 8 vote. The controversial nutritional supplement company would have seemed likely to benefit from a Trump victory. The president-elect has been paid millions by similar multilevel marketers, suggesting he may be sympathetic to the company's plight; and one of his top advisers, Carl Icahn, is Herbalife's biggest shareholder. Trump additionally will have the power to reshape the Federal Trade Commission (FTC) just as it begins overseeing an overhaul of Herbalife's U.S. operations. Under Democratic control, the regulator tightened oversight of multilevel marketing firms; but Trump can make appointments to shift control of the commission to his party. Even so, Herbalife's stock is down, suggesting just how worried investors are that the company can hold up against the FTC order. The agency took action after investor Bill Ackman bet $1 billion against Herbalife four years ago and called it an illegal pyramid scheme, a wager that has yet to pay off for him. Investors have also been waiting for Herbalife to start returning cash to shareholders again, one analyst said. The company suspended dividends and stock buybacks in 2014 amid the FTC probe and made no move to reinstate them after settling with the watchdog in July. Other challenges include the decline in value of the overseas revenue that makes up more than 80% of Herbalife's total sales.

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A Rare Corner of Finance Where Women Dominate
" New York Times (01/16/17) Stevenson, Alexandra; Picker, Leslie"

The Women in Governance lunch highlights a rare corner in finance that is dominated by women. According to data compiled by The New York Times, women serve as heads of corporate governance at seven of the 10 largest institutional investors in stocks, which oversee $14 trillion in assets. Although these large institutional investors often vote with management, their heads of corporate governance say they are quietly working behind the scenes to advocate for greater shareholder rights and gender diversity on corporate boards. Donna F. Anderson, head of corporate governance at T. Rowe Price, says, "We have an interest in seeing more women on boards because there is data that a more diverse board makes better decisions." Anne Sheehan, director of corporate governance at California State Teachers' Retirement System (Calstrs), said joining the public pension fund in October 2008 during the depths of the financial crisis after the collapse of Lehman Brothers was an eye-opener. "I saw it as an opportunity to make our voices known in the debate," Sheehan said. "What were these directors doing on our behalf? How could shareholders speak up? [The crisis] really brought home the prevalence of the 'Old Boys Network' inside the board rooms of these financial firms which resulted in too much group think." Sheehan noted that having women in positions of governance has helped bring such issues as gender diversity and the pay gap between top executives and the most junior employees to the forefront. BlackRock's Michelle Edkins added that women tend to be less confrontational than men. "We don't meet with CEOs and tell them how to remedy the problem," she said. "It's a stylistic difference and my observation is that this constructive challenge comes more naturally to women." Some experts say there is enormous potential for the network of women in corporate governance to make a bigger difference. "If there is an old girls' network so to speak with so much authority in corporate governance, this is an opportunity to create an agenda for greater diversity through a formalized means," said Jerry Davis, a professor at the University of Michigan Ross School of Business.

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Corporate Governance in a Trump Presidency
" 4Hoteliers (01/16/17) Kefgen, Keith"

Columnist Keith Kefgen writes that there are a number of trends in corporate governance that public boards should be aware of in the New Year.  Among them is board diversity.  "We live in a diverse world and boards should reflect that diversity of thought, gender, color, and creed," Kefgen states.  "Having completed several board searches recently, I have seen plenty of highly qualified, diverse candidates, albeit they might be first-timers."  Board refreshment will also be a big deal in 2017.  "Like any other leadership position, directors can get stale," he opines.  In this regard, term limits might make sense.  Other issues that may come to the forefront range from say on pay and performance reviews to shareholder activism and transparency. Kefgen is managing director and CEO of AETHOS Consulting Group.

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Why Great Lakes Dredge & Dock Can See Substantial Upside in 2017
" Seeking Alpha (01/12/17)"

Great Lakes Dredge & Dock Corp. (GLDD) has lost about 55% of its market cap since early 2013 when its shares were trading at around $10, mainly due to significant losses in its environmental and infrastructure (E&I) segment over the last few years. Further downside has been caused by a slowdown in the company's dredging business during the first nine months of 2016. However, things are beginning to look up for Great Lakes, with its E&I segment on the path to profitability and improvements seen in the bidding environment in the dredging business, which will help to improve margins and EBITDA. Meanwhile, such investors as Privet Fund and Clinton Group recently have taken stakes in the company, so observers believe investor-friendly steps like major share buybacks may be on the horizon. The company has seen activists and insiders buying shares in the $4 to $4.50 range.

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