Media Center

Featuring all breaking news and in depth articles and editorial press coverage pertaining to shareholder activism and corporate governance.

Updated: Crystal Amber Says Relationship With Hurricane Energy Has 'Deteriorated Dramatically'
Xerox to Expand Board, Nominate Nichelle Maynard-Elliott and Margarita Paláu-Hernández for Election at 2021 Annual Meeting
Sponsors Eye Bausch + Lomb Carve-out Opportunity
Refiner Delek Rejects Peer CVR Energy's Board Nominees
ValueAct Builds 5.2% Stake in Germany's Stroeer
Prudential's U.S. Spin-Off Plan on Track as Asia Drives Profit Rise
Exxon Vs. Activists: Can Disenchanted Investors Force Change?
Danone Needs New Independent Chairman Instead of Faber, Says Artisan
Starboard Takes Elanco Stake, Nominates Three to Its Board
Kohl’s Lays Out Optimistic Outlook Amid Pressure
Investor Cevian Wants Executive Pay Tied to ESG
Black and Latino Directors Largely Missing From Illinois Corporate Boards, First-of-Its-Kind Diversity Report Finds
Proxy Adviser ISS Backs Shareholder Proposal for Toshiba Investigation
TreeHouse Foods Announces Agreement With JANA Partners
Exxon Adds New Board Members Amid Investor Pressure
CVR Energy Questions Compensation of Delek Chief Executive
Danone's Faber to Give up CEO Role After Investor Pressure
SEC Says Exxon, Citi Must Let Investors Vote on ESG Issues
Pershing Square SPAC Discloses Bill Ackman's Tweets; Could a Deal Announcement Be Coming?
New Investment Firm Incap Invited to Join Board at Strategic Education
Big Companies Disclose Details on Gender, Race in Workforces
Nasdaq Reveals a Surprising Development in Swedish Boardrooms
NASDAQ to Amend Its Diversity Plan
Herbalife to Name Three New Directors as Icahn Era Ends
Danone Plans to Sell China Dairy Stake to Appease Shareholders
Japan Prepares to Shake up Corporate Code
An Investor With Value Approach Takes the Next Step to Turn Around a Food and Beverage Manufacturer
Paul Singer Warns of Trouble, and Is Eager to Say 'Told You So'
Top Hedge Fund Backers of Bill Ackman's Pershing Square Tontine Holdings
Judge Strikes Down Williams Cos 'Poison Pill' Takeover Defense
Bill Ackman Tweets Trigger Chatter on Pershing Square Tontine Deal
U.S. Utility Evergy Adds Directors in New Agreement With Elliott
Investment Funds Turn Up Heat on Danone to Name New CEO
Twitter Lets It Fly
St. James's Place Tightens Focus
Third Point Believes Prudential PLC’s Asian Franchise Is Substantially Undervalued
Casdin Capital and Corvex Management's SPAC CM Life Sciences III Files for a $400 Million IPO
Legion Nominates Four to OneSpan's Board, Pushes for Asset Sales
Herbalife CFO Looks to Change Investor Views After Years of Investor Pressure
Ancora Nominates Four Highly-Qualified Candidates for Election to the Board of Blucora Inc.
AT&T Carves Out Pay-TV Business in Deal With TPG
2021 Global and Regional Trends in Corporate Governance
Gender Quotas and Support for Women in Board Elections
Kohl’s Should Reject Short-Sighted Investor Recommendations
An Introduction to Engagement Stewardship
'Korean Version of Elliott' Becomes Feasible
A Hedge Fund’s Bet on Criminal Justice
New Tactics and ESG Themes Change the Direction of Shareholder Engagement
New Tactics and ESG Themes Change the Direction of Shareholder Activism
2020 Poison Pill Recap and Current Trends
Danone's Test Case for Sustainable Business
Bausch Health: Valued Significantly Below Sum of the Parts and Generating Investor Interest
Tick Tock: How Perspecta Decided on Its Sale to Veritas

3/4/2021

Updated: Crystal Amber Says Relationship With Hurricane Energy Has 'Deteriorated Dramatically'

Energy Voice (03/04/21) Lammey, Mark

Crystal Amber (CRS), a major shareholder in Hurricane Energy (HRCXF), announced intentions to take "appropriate action" to maximize the company's potential after saying its relationship with the oil firm suffered a "dramatic deterioration" over the last six months. Crystal Amber owns a more than 11% stake in Hurricane, and has charged the company's board with being "both indecisive and obstructive." The fund alleged that Hurricane's "messaging to market participants" had been "inadequate, confusing, and poor." Hurricane countered that it had "engaged consistently" with Crystal Amber over the last six months. Crystal Amber cited its exclusion from Hurricane's ongoing stakeholder engagement process regarding its strategy, financing, and balance sheet recapitalization. The investor said it asked why the company was "not keen" to develop the Lincoln Crestal well, despite having been tested at a "sustained commercial rate." Hurricane has to date supplied no explanation, or responded to a request to nominate a director to its board. Crystal Amber also suggested in October that Hurricane should buy in some of its loan notes at below 50% of par value, noting the company's chairman had previously described such purchases as a "commercial no brainer." Yet Hurricane had not provided an update on bond purchases or capital allocation. The fund further said Hurricane had not clarified whether bondholder consent would be necessary before it could enter into financial commitments for future workstreams. Hurricane has to repay or refinance a £180 million convertible bond in 2022, and Crystal Amber reported that "the seven board members of Hurricane own shares with a total value of £60,000. We are no longer prepared to be excluded from participating in the evaluation of impending critical decisions by those who have virtually no skin in the game. We always prefer to engage privately and constructively with our investee companies." Antony Maris took over as full time CEO of Hurricane in September, the same day the company announced a huge downsizing of its resources base west of Shetland, which caused shares to plunge. Hurricane was banking on increasing production from its Lancaster field by drilling a sidetrack on an existing well this year, but on Tuesday said drilling the well this summer carried "unacceptable operational and cost risk."

Read the article

3/3/2021

Sponsors Eye Bausch + Lomb Carve-out Opportunity

PE Hub (03/03/21) Pringle, Sarah

Sources say large financial buyers are looking at the potential opportunity to carve-out Bausch + Lomb. Parent company Bausch Health, the healthcare and pharmaceutical products giant formerly known as Valeant Pharmaceuticals, publicly announced in August its plans to spin off the eye-health subsidiary into a separate publicly traded company. An outright sale versus a spinoff would present an opportunity to generate a lot more cash needed to de-lever, sources said, since Bausch, as of year-end, was sitting on more than $24 billion of total debt. The company then known as Valeant acquired Bausch + Lomb in August 2013 for $8.7 billion. The sale process comes as Bausch Health faces mounting pressure from shareholders to unload the unit. Bausch Health last week awarded Icahn Capital two independent board seats after the investor recently disclosed a 7.8% stake in the company. The new board members, Brett Icahn and Steven Miller, will be appointed to two board committees: finance and transactions and the committee assisting with evaluating strategic alternatives. Glenview Capital Management, which owns a 6% stake in Bausch Health, sent a letter to the company in February calling for the “equitizing and spinoff of Bausch Global Eyecare in an optimal fashion.” Glenview said that “communications regarding the timeline, capital structure, and conditions necessary to move forward with the spin have been cryptic at best.” Glenview among other things recommended Bausch Health raise capital by selling a stake in the eyecare subsidiary at fair value.

Read the article

3/3/2021

Exxon Vs. Activists: Can Disenchanted Investors Force Change?

Financial Times (03/03/21) Brower, Derek

Exxon (XOM) CEO Darren Woods and his management team are facing an investor campaign seeking a board-level upheaval and strategic redirection of the company. Exxon's shares are up almost 40% since the start of this year, but shareholders remain restless. The campaign launched in December by Engine No. 1 is tapping a deep well of investor disenchantment. Resentment at Exxon's perceived offhand treatment of shareholders and hostility to change, coupled with the impression that it is not taking climate change risks as seriously as investors do, is breeding discontent. Engine has nominated four new directors to Exxon's board and called for more capital discipline, an overhaul of management compensation, and a new strategy for a transition to cleaner energy. It says Exxon must also adopt “a path to net-zero total emissions by 2050.” The fund's selection of people with substantial energy experience could prove significant. Exxon moved this week to appoint three new directors of its own, including Jeff Ubben. This was enough to satisfy DE Shaw, which will now vote for the company's slate of directors at May's annual meeting, according to people familiar with its thinking. The company has made other changes sought by shareholders, reporting since January so-called Scope 3 emissions from the products it sells. Even so, Bess Joffe, head of responsible investment at the Church Commissioners for England, dismissed the company's recent moves as “whack-a-mole” offers to activists. Woods continues to rule out a net-zero target, and Exxon does not plan to follow BP and other oil operators into clean electricity. This approach and the recent board changes have not reassured other skeptical investors, including the California State Teachers' Retirement System, an important backer of Engine No. 1's campaign.

Read the article

3/2/2021

Kohl’s Lays Out Optimistic Outlook Amid Pressure

Bloomberg (03/02/21) Holman, Jordyn

Kohl’s Corp. (KSS) has given an upbeat sales outlook and announced plans to reinstate its dividend, bolstering management and its strategy amid pressure from a group of investors. The retailer says 2021 net sales will grow by a percentage in the mid-teens, while investors can expect the return of a dividend and share buybacks. The results show signs that Kohl’s new strategy is gaining traction. The retailer is focusing on categories like sportswear, outdoor apparel, and beauty and has teamed up with Sephora for in-store shops, which it says will help drive store traffic. Its partnership to accept returns from Amazon.com Inc. (AMZN) customers is already increasing foot traffic and bringing in younger shoppers, according to CEO Michelle Gass. A group of investors including Macellum Advisors GP LLC and Ancora Holdings Inc. have said a more comprehensive overhaul is needed. They are seeking nine board seats and have said the company should cut back its inventory and stop offering “promotional gimmicks.” In an interview on Tuesday, Gass reiterated that she and the board are “open to all ideas that can help us create shareholder value” but don't support adding nine directors to the board. Kohl's reported in early February preliminary fourth-quarter results showed an 11% decline in same-store sales and 10% drop in total revenue. The company expects sales to rebound in the second half of 2021, echoing the view of other retailers. As the vaccine rollout continues to expand, there are expectations that consumers will spend more freely in areas that they've neglected during the long period of social distancing.

Read the article

3/2/2021

Black and Latino Directors Largely Missing From Illinois Corporate Boards, First-of-Its-Kind Diversity Report Finds

Chicago Tribune (03/02/21) Jimenez, Abdel

A first-of-its-kind study from the University of Illinois at Urbana-Champaign (U of I), commissioned by the state, indicates significant underrepresentation of Black and Latino directors among Illinois' largest publicly held companies. Analysis of 74 publicly traded firms found that 35% have two or more people of color on their boards, and 67% have two or more female directors. Boards range from four to 23 directors. While companies have no obligation to meet specific diversity targets, a state law says boardrooms should be representative of Illinois' populace. The U of I researchers compared the demographic information companies provided with population data from the 2019 U.S. Census, determining that boards on average had lower representation of Asians, Blacks, and Latinos than the state's overall population. Approximately 40% of the Illinois population is comprised of people of color, which accounted for only about 15% of board members at the average company. Nineteen companies reported lacking any board members of color. Analysts also employed census data to measure the diversity of boards against workforce demographics in their respective sectors. "Companies, when they consider appointing people or electing people to the board of directors, they consider industry experience as an important condition. So that might be a useful benchmark," said U of I School of Labor and Employment Relations Professor Richard Benton. The researchers investigated companies with two or more women or people of color on their boards because prior studies have used that number as a benchmark. Benton said sole members of a particular demographic group can often be described as "tokens." He added that "very long-standing research dating back to the 1970s suggests that a lone women or minority in a work setting may not have equal opportunities to participate in discussions and may feel the increased pressure of being a sole representative of their group." A lack of Black, Asian, and Latino directors was noticeable among the companies that supplied sufficient data. Roughly 53% of firms disclosed having no Black board members, 70% had no Asian directors, and 83% had no Latino directors. Stanford Graduate School of Business Professor David Larcker explained that Illinois needs to investigate middle managers and how companies promote and help advance workers within the firm.

Read the article

3/2/2021

Proxy Adviser ISS Backs Shareholder Proposal for Toshiba Investigation

Reuters (03/02/21) Yamazaki, Makiko

Institutional Shareholder Services (ISS) has recommended that Toshiba Corp. (TOSYY) shareholders vote in favor of a proposed independent investigation into allegations that investors were pressured ahead of last year’s annual meeting. The recommendation has the potential to tip the balance of power towards Effissimo Capital Management and other shareholders in their conflict with CEO Nobuaki Kurumatani and management of the industrial conglomerate. The vote will take place at a shareholders’ meeting on March 18 and activist investors are estimated to hold about 25% of Toshiba’s shares. Effissimo, which is Toshiba’s biggest investor with a 9.9% stake, made the proposal after investor complaints about the last AGM. Reuters has reported the Harvard University endowment fund had been told by a Japanese government adviser that it could be subject to a regulatory probe if it voted against management. As a result, the fund abstained from voting and later learned there was no basis for any probe. Toshiba has conducted its own investigation into the matter and found it was not involved in any effort to pressure the Harvard fund. Effissimo has also asked that allegations of miscounting of votes at the AGM be further looked into. In a report seen by Reuters, ISS called that probe “one-sided” and said it was difficult to escape the impression that Toshiba conducted a perfunctory investigation. At the last annual general meeting, Kurumatani kept his job with just 57% of the vote. In its report, ISS recommended against a different proposal from Farallon Capital Management, Toshiba’s second largest shareholder, which seeks to force the board to present a five-year capital policy plan or make certain returns to shareholders. It said the U.S. hedge fund’s proposal was “overly prescriptive, particularly given its five-year duration, to warrant support.”

Read the article

3/1/2021

CVR Energy Questions Compensation of Delek Chief Executive

Reuters (03/01/21) Sanicola, Laura

CVR Energy Inc. (CVI) has questioned the compensation of Delek U.S. Holdings (DK) CEO Uzi Yemin as it seeks to add three new directors to Delek's board, according to a letter submitted by CVR CEO David Lamp with the Securities and Exchange Commission. CVR is controlled by Carl Icahn. Lamp cited Yemin's 5% general partnership stake in Delek Logistics Partners (DKL) that Delek U.S. Holdings bought out last year for $21.4 million. "For reasons that are not readily apparent, Mr. Yemin was also given a highly lucrative ownership interest in Logistics, despite the obvious conflicts of interest that presented," Lamp wrote. Delek said it would reply to Lamp's letter in due course, noting that CVR's activism push "is not in the best interests of Delek shareholders." Lamp wrote that he wants access to more detailed documentation to determine if Yemin breached his fiduciary responsibility. CVR in January pressured Delek to sell off its convenience store locations and close its refineries in Krotz Springs, La., and El Dorado, Ark., as well as potentially convert them to terminals or for renewable diesel production. "CVR's previous letter demanded that Delek take a number of actions that would benefit CVR, to the detriment of Delek and its shareholders," Delek declared, adding that the company's strategy led to shareholder yields of more than 92% over the past five years, significantly higher than its peers. Delek Logistics Partners was established by Delek U.S. Holdings to own, manage, acquire, and build crude oil and refined products logistics and marketing assets, according to the corporate website.

Read the article

3/1/2021

Danone's Faber to Give up CEO Role After Investor Pressure

Reuters (03/01/21) White, Sarah; Barzic, Gwénaëlle

French yogurt maker Danone SA (DANOY) has voted to separate the chairman and chief executive roles held by Emmanuel Faber and start searching for a new CEO. Faber will remain in the dual position until a new CEO is found and then become non-executive chairman. The world’s biggest yogurt maker is trying to draw a line under growing pressure from investors over the firm’s share price and strategy, which has led to unease at the board level too. Now in his seventh year as chief executive, Faber has pursued a strategy centered on diversifying into fast-growing products featuring probiotics, protein, and plant-based ingredients to mitigate slower growth in dairy. In recent months and with speculation around an incursion by activist investors growing, Faber announced a plan to cut 2,000 jobs, trim product ranges, and sell some assets, including the group’s business in Argentina and the Vega plant-based brand. U.S. investor Artisan Partners Asset Managers Inc., now Danone’s third-largest shareholder, recently joined Bluebell Capital Partners in urging the firm to find a new CEO and speed up efforts to boost returns. On Sunday, Danone announced plans to sell its stake in Chinese dairy firm Mengniu and use the gains to buy back its own shares. Faber was the person who put forward to the board the proposals to separate the CEO and chairman roles and to start the search for a new CEO, and the board’s decisions were unanimous, according to a statement from the company. The CEO search could go quickly, a source familiar with the discussions said, and up to eight names of potential candidates are already circulating among board members. Sales growth, margins, and the share price have lagged the performance at some rivals, but Faber has had some backing from worker unions. The executive has a following as an advocate of a more sustainable way of doing business, and has taken steps to link Danone’s performance to social and green criteria and pledged to focus on issues such as packaging and healthier brands.

Read the article

2/27/2021

An Investor With Value Approach Takes the Next Step to Turn Around a Food and Beverage Manufacturer

CNBC (02/27/21) Squire, Kenneth

13D Monitor founder and President Kenneth Squire writes that JANA Partners on Jan. 29 informed TreeHouse Foods (THS) of its plan to nominate Meredith Adler (Institutional Investor's top ranked analyst in the food and drug industry for 14 years), John Paul Gainor Jr. (former Dairy Queen [DQ] CEO and president), and Charles L. Myers (former portfolio manager at Fidelity) for the company's board at its 2021 Annual Meeting. JANA believes this represents an appealing investment opportunity with TreeHouse nearly three years into a sweeping turnaround. Treehouse's current stock market value is $2.8 billion, with a per-share price of $50.02 per share. JANA has been engaged in constructive dialogue with TreeHouse's board and management on measures to resolve the company's undervaluation and total stockholder return, including assessing a sale of the company, operations, capital allocation, corporate governance, and compensation practices. JANA has extensive experience in the food and beverage manufacturing sector, including a solid track record in the consumer retail space. Its involvement has led to sales of Pinnacle, PetSmart (PETM), Safeway, Whole Foods (WFM), and ConAgra's (CAG) spinoff of its Lamb Weston (LW) business. Moreover, a substantial portion of Treehouse's assets were acquired from ConAgra at JANA's behest. Although JANA partner Scott Ostfeld is on ConAgra's board, Squire doubts that ConAgra is a potential Treehouse acquirer. It is not interested in private label production, as demonstrated by the 2015 sale of its Ralcorp business to TreeHouse for $2.7 billion following its $5 billion acquisition three years before. "TreeHouse is a pure play private label business, which is an area of tremendous secular tailwinds," Squire states. "Private label brands are cheaper for consumers, more profitable for retailers, and do not have the stigma of generic brands of yesteryear (think Whole Foods 365 or Costco's [COST] Kirkland). As a result, shelf space has been migrating towards private label space, with tremendous growth in the U.S., which is not close to the penetration level of Europe." While Treehouse is engaged in an extensive turnaround program, its operational improvements have not led to commensurate upgrades in stock price. Squire points out that Post (POST) sold part of its private label business to Thomas H. Lee Partners for over 10 times EBITDA in 2018. "A 10 times multiple here would imply a six handle on a sale," he writes. "Similar to their engagements in Whole Foods, ConAgra, and Pinnacle, JANA has yet again teamed up with world-class executives who they are nominating to the board. While their expertise would not be as necessary in the context of a sale of the company, they could certainly help evaluate a potential sale, and they have tremendous experience in public markets as well, so they can help rehabilitate the equity story in the meantime."

Read the article

2/26/2021

Paul Singer Warns of Trouble, and Is Eager to Say 'Told You So'

Bloomberg (02/26/21) Porzecanski, Katia; Kumar, Nishant

Elliott Management's Paul Singer wrote in a recent letter to clients that a "flamboyant line-up" of excesses will come back to haunt investors. “We believe that hindsight will show the champion of head-smacking craziness in the American stock market to be the period playing out right now,” Singer wrote in the Jan. 28 letter. In his view, the Fed’s current iteration of quantitative easing paired with trillions of dollars of stimulus to counter the pandemic are setting things up for a fall. Rampant inflation will shock policy makers, stock pickers, and bond investors, alike. “‘Trouble ahead’ is signaled by a rare combination of low-quality securities, staggering valuation metrics, overleveraged capital structures, a scarcity of honest profits, a desperate dearth of understanding evinced by the most active traders, and economic macro prospects. Markets have begun to show cracks in recent days. Benchmark 10-year Treasury yields catapulted to their highest in more than a year, equities tumbled, and traders yanked forward their opinion of how soon the Fed will tighten monetary policy. While pledging to stick to the basics at his multistrategy operation, Singer expressed frustration at what he sees as the hysteria driving everything from Bitcoin to government debt. Elliott made money every month in 2020, even in the March rout, gaining 12.7% for the year, thanks to “a combination of portfolio-protection trades related to interest rates and gold, together with our core activities” including distressed debt, equity activism, and private equity. The firm has registered annualized gains of about 13% in its 44 years, beating the S&P 500 Index. Even as the world begins to recover from the pandemic, Singer urged keeping expectations in check. Certain industries and activities, like commercial real estate, movie theaters, retail, restaurants, and business travel, will continue to be significantly challenged, he said. In the meantime, he wrote, the recovery will be stymied by virus variants and policies “that sometimes seem governed by short-term political pressures rather than what is best for society, short and long term.”

Read the article

2/26/2021

Judge Strikes Down Williams Cos 'Poison Pill' Takeover Defense

Reuters (02/26/21) Hals, Tom

On Feb. 26, Vice Chancellor Kathaleen McCormick of Delaware's Court of Chancery struck down a poison pill adopted by Williams Cos. (WMB) last year to defend against a potential takeover following a steep decline in oil prices. The judge found that the poison pill was a disproportionate response to the threat that an investor might emerge when the stock was at a low point during the start of the pandemic. "They have failed to show that this extreme, unprecedented collection of features bears a reasonable relationship to their stated corporate objective," wrote McCormick in her ruling. The company adopted the poison pill when its stock price dropped under $10 a share at the same time oil prices tumbled early in the Covid-19 pandemic. The poison pill—which set the threshold an investor would have to accumulate to trigger the pill at 5% and included a "wolfpack" to prevent investors from contacting other similarly minded shareholders—was called "unprecedented in that it contained a more extreme combination of features than any pill previously evaluated by this court," according to McCormick. Steve Wolosky, an attorney who often represents investors like Starboard Value, was the plaintiff in a class action against Williams, arguing that the pill no longer served a purpose as the stock had recovered and that the board was using the pill to entrench themselves.

Read the article

2/26/2021

Investment Funds Turn Up Heat on Danone to Name New CEO

Reuters (02/26/21) Kar-Gupta, Sudip; Van Overstraeten, Benoit; White, Sarah

U.S. investor Artisan Partners (APAM) has joined BlueBell Capital Partners in pushing Danone (DANOY) to replace CEO Emmanuel Faber to improve its governance practices and accelerate efforts to increase yields. Shareholder pressure on Faber has been rising as the French food group has trailed competitors during the Covid-19 pandemic. Danone stated that its board and management team is open to suggestions from all shareholders, but it did not answer calls for a new CEO. "Understanding shareholder priorities is a top priority of the senior management team and the board of directors," the company declared. French daily Le Monde said Danone's board is scheduled to meet on March 1. Artisan controls a 3% stake in Danone, and echoed BlueBell's call for separating the roles of CEO and chairman. "The roles of CEO and chairman should be split to reflect modern-day corporate governance," Artisan wrote. "Governance standards also require that prior leadership leave the board. And logic demands more consumer goods experience on the board of directors." The investor maintained that "a new, non-financial CEO with consumer goods experience and a track record of success should be installed as soon as possible to restore Danone to the elevated status it deserves within the French business establishment." Artisan previously lobbied Danone to divest underperforming brands like Asian water label Mizone. Faber recently attempted to counter investors' push, announcing in November a plan to slash 2,000 jobs, de-scale product ranges, and sell certain assets, including Danone's Argentina business and its Vega plant-based brand.

Read the article

2/25/2021

Twitter Lets It Fly

Wall Street Journal (02/25/21) Forman, Laura

On Thursday, Twitter (TWTR) shares rose as much as 12% higher in advance of the company's virtual investor day. In a regulatory filing that morning, Twitter said it would aim to at least double its revenue, reach at least 315 million monetizable daily active users, and essentially double one internal measure of the pace of features released by the end of 2023. It is hard to know which of Twitter's goals is most ambitious. Estimates compiled by Visible Alpha show Wall Street wasn't expecting Twitter to hit that level of revenue and users until 2025 and 2027, respectively. Getting there by 2023 will require rapid innovation, which doesn't come cheap: Twitter's earlier outlook for this year called for 20% head-count growth and 25% growth in cost and expenses on an annual basis. Taken together, Twitter's announcements sound something like the aggressive direction Elliott Management pushed for last year, when it advocated for CEO Jack Dorsey's removal, asserting his attention was stretched too thin by leading two companies at once. In his kickoff comments on Thursday, Dorsey noted Twitter's work to rebuild its ad server is already paying off, resulting in 31% ad revenue growth in the fourth quarter versus the year prior. While it used to take six to 12 months to get a new product to its customers, Twitter is now working toward getting a new feature or product out in under a few weeks. Twitter's recent acquisitions in Squad (a video chat app), Breaker (a social podcast app), and Revue (a subscription newsletter service), should collectively make Twitter a more attractive place for public conversation and, in turn, a more compelling place for advertisers. Dorsey pointed to an emphasis on topics, calling it the area that would have the biggest impact on its business and its user experience.

Read the article

2/25/2021

St. James's Place Tightens Focus

Investors Chronicle (02/25/21) Newman, Alex

St James’s Place (STJ) was given a wake-up call at the end of 2020 when investor PrimeStone called out the company's poor management of its own cost base. PrimeStone discovered some 120 employees with a “head of…” title, weighty business function teams, and protracted outsourcing arrangements, the combined effect of which had driven up operating expenses per adviser by 65% in five years. “The current share price does not reflect the full value of the strength of its business model, its leadership position, or its long-term growth potential,” the group wrote on Oct. 26. Full-year returns suggest that St James’s has taken the missive seriously. Management confirmed around 200 jobs across the business will be cut (at last count non-partnership employees stood at more than 2,600) in a bid to remove duplication of work and stop tasks “that are now no longer needed,” while legacy technology investments are now deemed sufficient to help cap operating expense growth at around 5% per annum. In addition to placating PrimeStone and other cost-conscious investors, the hope is that earnings growth will follow if the business can hit a secondary target to boost new business by around 10% each year. “With modest help from investment markets and continued high retention rates,” says CEO Andrew Croft, this “would see funds under management grow to in excess of £200bn by the end of 2025.” That scrapping of rigid goals in favor of incremental control seems wise. Results for 2020 also suggest that the new growth target is achievable, as strong asset prices helped offset an 8% dip in net client flows to lift total managed funds by 11% to a record £129 billion. Importantly, the decline in new investments was blamed on Covid-19-related restrictions, so presumably management believes a return to face-to-face contact could see a flood of new business.

Read the article

2/25/2021

Third Point Believes Prudential PLC’s Asian Franchise Is Substantially Undervalued

Insider Monkey (02/25/21) Tottoc, Jose Karlo Mari

In its investor letter for the fourth quarter of 2020, Third Point disclosed a 16.1% net return, outperforming all its benchmarks. Third Point noted in the letter its belief that Prudential PLC's (PUK) unique Asian business is substantially undervalued but praised the company's recent move to separate its U.S.-based annuity business, Jackson National, via a demerger in Q2 2021. Third Point said the move is "a net positive and important step forward" because it will significantly accelerate Jackson National's separation, and because "an equity capital raise out of Hong Kong and a potential listing on the Southbound Stock Connect exchange will be an important catalyst to build liquidity among Asian shareholders." The investor says "this decision, while challenging on an immediate basis, pulls forward the realization of independence and local ownership participation that is essential to achieve full value for long-term shareholders." Third Point also said Prudential has been making "substantial progress" in its governance, especially around board talent and diversity. "Shriti Vadera, who formally assumed her role as Chairwoman last month, brings a wealth of expertise in Asia strategy, capital allocation, technical innovation, and ESG," Third Point writes. "She recently recruited two new Asia-based board members who bring important skills to help guide the new Pru Asia. Chairwoman Vadera and CEO Mike Wells' commitment to long-term value creation gives us great confidence in the future of this business."

Read the article

2/25/2021

Herbalife CFO Looks to Change Investor Views After Years of Investor Pressure

Wall Street Journal (02/25/21) Maurer, Mark

Herbalife (HLF) CFO Alex Amezquita wants investors to think differently about Herbalife, with a focus on its revenue and profit. The company's revenue climbed 15.6% to $1.41 billion during the quarter ended Dec. 31 compared with the prior-year period, while profit grew 30.2% during the latest quarter and shares rose 1.8% over the course of 2020. Amezquita wants to use tools such as virtual roadshows, investor conferences, and conversations with analysts to recast the messaging around Herbalife as a growth company. Herbalife is looking to attract more long-term, international investors, such as pension and sovereign-wealth funds, to stabilize its share price, Amezquita said. Certain hedge funds created significant volatility in the stock when they bought in, he said. The company's biggest shareholders include investment manager Capital Research & Management Co., hedge fund Renaissance Technologies LLC, index-fund investment giant Vanguard Group Inc., and hedge-fund manager Route One Investment Co. Companies' efforts to develop or expand a shareholder base can take at least 12 to 18 months as executives educate investors about the business model, said Jim Rossman, head of shareholder advisory at investment bank Lazard Ltd. Amezquita joined Herbalife in 2017 as senior vice president of finance, strategy, and investor relations after serving as a senior vice president at investment bank Moelis & Co. Carl Icahn, who is estimated to have made more than $1 billion on his investment in Herbalife, keeps a roughly 6% stake in the company worth about $400 million. "In many cases, activists get involved at a company when there's a problem, which was the case at Herbalife," Icahn said. "The company has better controls than it did before we invested in it, and we believe we were meaningfully responsible for that."

Read the article

2/25/2021

Ancora Nominates Four Highly-Qualified Candidates for Election to the Board of Blucora Inc.

Business Wire (02/25/21)

Ancora Holdings Inc., together with its affiliates, which owns in the aggregate approximately 3.4% of the outstanding shares of Blucora Inc. (BCOR), has issued an open letter to stockholders and announced that it has nominated four highly-qualified candidates for election to the company’s board of directors at Blucora’s 2021 Annual Meeting of Stockholders: Frederick D. DiSanto, Cindy Schulze Flynn, Robert D. MacKinlay, and Kimberly Smith Spacek. In its letter, Ancora highlights a number of reasons why it believes Blucora needs board refreshment, including negative TSR and underperformance relative to peers, substantial sum-of-the-parts and private market value discounts, poor capital allocation leading to major goodwill impairment, a bloated corporate infrastructure that dilutes shareholder value, ineffective board oversight and troubling management turnover, and entrenchment and manipulation of the board election process. In its letter, Ancora expresses its view that Blucora’s wealth management/registered investment advisor business, Avantax, is a highly attractive asset given its significant scale and niche focus. However, Ancora is not aware of evidence of any meaningful synergies between this business and the company’s tax preparation business, TaxAct. Ancora’s letter outlines how it believes that a reconstituted board can help address Blucora’s challenges and ultimately unlock substantial value, including by refocusing the company’s attention and resources on operating, improving, and growing the Avantax business; creating a special committee of independent directors to assess operational improvements and explore strategic alternatives for the TaxAct business; and establishing a disciplined capital allocation framework that emphasizes paying off current debt and eventually implementing a stock-repurchase program.

Read the article

3/2/2021

Kohl’s Should Reject Short-Sighted Investor Recommendations

Wall Street Journal (03/02/21) Lee, Jinjoo

Investors representing a combined 9.5% stake in Kohl's (KSS) are pushing for change at the company. Macellum Advisors, Ancora Holdings, and Legion Partners are involved in this campaign, having successfully pushed for change at Bed Bath & Beyond (BBBY) in 2019. The author argues that this time, the investors' argument is not convincing in part because Kohl's has fared better than peers in a struggling industry. Kohl's report on Tuesday morning showed that the company's net sales in the fourth quarter ended Jan. 31 declined 10% from a year earlier, exceeding analyst estimates. Not only is that better than department store peers, it is also in-line with off-price retailers, which have been the main threat to department stores in recent years. Many of the observations investors have about Kohl's are astute but come off as nitpicks because they are issues the retailer is already working on. For example, the letter calls for better inventory turnover; this was something Kohl's had already said it began working on, and inventory turn in the fourth quarter was at a 10-year high. While it is true that profitability has been declining over the years, the company has done a decent job of holding on to its margins despite depressed sales in 2020. The investors are also pushing for sale-leasebacks of properties and share repurchases, pushing to increase earnings per share by at least 25%. The author says this recommendation seems "optimized for juicing short-term returns."

Read the article

2/27/2021

A Hedge Fund’s Bet on Criminal Justice

New York Times (02/27/21) de la Merced, Michael J.

Daniel Loeb's Third Point has become a corporate partner of Ladies of Hope Ministries (LOHM), fronted by criminal justice activist Topeka Sam. Third Point's backing of Sam's group is, by Loeb's own reckoning, similar to the kinds of investments that his hedge fund makes. “Philanthropy is a lot more like hedge fund investing than you might think,” he said. “You're thinking of ways to allocate capital and creating a scalable impact.” That includes political impact: Loeb said that he worked his network to lobby for a presidential pardon for Sam, which she received last December. Loeb has committed to donating $1.5 million over three years through his family's foundation, and Third Point employees have given $80,000 so far. Loeb, who has donated largely to Republicans in recent election cycles, has supported groups like the Brennan Center for Justice, the Innocence Project, and the Marshall Project in recent years. Loeb first met Sam around 2017, as he was looking for new ways to donate to criminal justice groups. Her emphasis on helping prevent recently released women from recidivism persuaded him to back her as a sort of philanthropic entrepreneur. Michelle Marcellus, a lawyer at Third Point, has joined the nonprofit group's board; the fund's real estate team will help find more affordable housing for women using its services; the marketing department started holding regular calls with the group; and outside lawyers for Third Point at the corporate firm Willkie Farr & Gallagher offered their services to the group. After Third Point's “investment,” L.O.H.M. is looking to expand in Baltimore, Miami, and Philadelphia. The way it approaches its work may also change because of the support coming from the hedge fund. The next step is getting others on board. Loeb said that he would introduce Sam and her organization to the growing community of financiers and entrepreneurs who had moved to Miami, where he—along with a burgeoning group of hedge fund tycoons—has been spending more time.

Read the article

2/26/2021

New Tactics and ESG Themes Change the Direction of Shareholder Activism

Harvard Law School Forum on Corporate Governance (02/26/21) Grossman, Richard J.; Stronski, Neil P.

Shareholder activism picked up at the end of a slower year in 2020, with more than 80 CEOs replaced during campaigns during the second half of the year. Some investors are raising permanent capital for activist approaches, which have become more acceptable to many institutional investors. Even high-performing companies may face pressure on environmental, social, and governance (ESG) issues. Some established activists have recently formed ESG-focused funds alongside their regular pools to engage companies they contend have not met ESG standards, and some, including ValueAct founder Jeff Ubben, have formed new ESG-only activist firms. Moreover, a number of major activist firms have begun acting more like private equity firms, pursuing outright acquisitions or negotiating for private investments in public entities. Meanwhile, some private equity firms have pursued more activist-like strategies, and in some cases, activists have teamed up with strategics or private equity firms on acquisitions. Over the last few years, as activism has become more accepted, some long-only asset managers have supported activist campaigns where they thought it would increase the value of their investments. This reflects a broader transition to a more shareholder-centric model of corporate governance. The best defense for companies is strong shareholder engagement coupled with a plan for dealing with activists if they emerge.

Read the article

2/25/2021

2020 Poison Pill Recap and Current Trends

JD Supra (02/25/21) Goodman, Mara Elyse; Klein, Specer; O'Bryan, Michael

The number of stockholder rights plans, or poison pills, adopted in 2020 nearly tripled compared to prior years. Every rights plan sets a triggering percentage; most anti-takeover rights plans have triggering percentages ranging from 10% to 20%. Some rights plans bifurcate the trigger, setting a higher triggering percentage for passive investors and a lower, general triggering percentage. If the general triggering percentage is set below 15%, most recent plans bifurcate the trigger, with the higher triggering percentage typically being set at 20%. Almost every rights plan includes a carve-out provision for acquirers who inadvertently (as determined by the board) trigger the plan. In addition, some companies have included “acting in concert” provisions in their rights plans that broaden the traditional definition of beneficial ownership to capture certain kinds of informal coordination among stockholders. Some stockholders have criticized acting in concert provisions as chilling their ability to communicate with other stockholders. Rights plans commonly include a “grandfather clause” that exempts stockholders who, at the time of the rights plan's adoption, have ownership stakes equal to or greater than the rights plan's triggering percentage. This allows these stockholders to maintain their stakes without immediately triggering the rights plan upon adoption. An increasing proportion of rights plans provide the board a limited window after an acquirer exceeds the triggering percentage during which the board can redeem for a nominal amount or otherwise terminate the rights. This is known as a “last look” provision, and it gives the board the ability to avoid the dilutive effects of a triggered rights plan. About half of the rights plans adopted in 2020 contained a last look provision. While it seems sensible to put this decision in the hands of the board rather than a third party, doing so may weaken the rights plan's deterrent value. About 15% of rights plans adopted in 2020 contain a “qualifying offer” provision, which gives stockholders the right to force the board to call a special stockholder meeting to vote on whether to exempt the offer from the rights plan. Some boards have determined to include the provision to emphasize to stockholders that they are not categorically opposed to a takeover of the company. In fact, both ISS and Glass Lewis state in their guidance for stockholder vote recommendations that rights plans should contain a qualifying offer provision.

Read the article

2/23/2021

Bausch Health: Valued Significantly Below Sum of the Parts and Generating Investor Interest

Seeking Alpha (02/23/21) Dopierala, Justin

DOMO Capital Management says Bausch Health (BHC) is significantly undervalued based on a sum of the parts analysis, and thinks the per-shares price should be closer to $80. Well-known investors own approximately 30% of shares outstanding in BHC. DOMO has been a BHC shareholder since 2017, and BHC currently has the largest weighting of roughly 27% in the DOMO Capital Concentrated All Cap Value Composite. DOMO finds it vexing why BHC management is taking little action on what it sees as a golden opportunity to unlock value in the current market environment. Moreover, the timing of share purchase gains by activists is not random, as the annual shareholder meeting will be held in about two month. FactSet (FDS) considers four of BHC's top five shareholders to be High to Very High for activism, with the fifth largest designated a Medium ranking. The latest 13F/13D filings indicate that Icahn Capital owns 7.8% of outstanding shares in BHC to Paulson & Co.'s 7.28%, ValueAct Capital Management's 5.05%, Glenview Capital Management's 4.63%, and GoldenTree Asset Management's 3.15%. Meanwhile, Glenview recently excoriated BHC's management in a letter stating that they own approximately 6% of shares outstanding which represents a material gain from the end of last year. Icahn's stake in BHC was unknown until he filed a 13D on Feb. 11. ValueAct partner Robert Hale and Paulson & Co. President John Paulson already have two seats on BHC's board, but represent less than 20% of the 11 board seats. DOMO thinks a proxy battle could erupt in the coming months if BHC's management fails to assuage shareholder concerns on Wednesday's earnings call and does not take prompt action. Meanwhile, a CNBC article authored by 13D Monitor's Ken Squire on Carl Icahn's intentions and the potential use of special purpose acquisition companies (SPACs) may offer insights. The article said Icahn will certainly want to ensure that shareholders reap full value in the separation of BHC's eyecare business, which could mean a sale of the business rather than a separation. Moreover, the creation of a SPAC by a conglomeration of the current shareholder activists could be attractive. DOMO suggests they could pay fair value for specific operating segments of BHC and then merge them with assets from other companies to create a combination with even greater value. This means they would double-dip by having their BHC investment increase substantially while also using the SPAC to derive additional value, and the total cost would be less than a spin-off, while also preventing the costs that a proxy battle would entail.

Read the article