Macellum Capital's Jonathan Duskin Talks Activism
WWD.com (04/15/21) Moin, David
Macellum Capital Management was one of a group of activist investors that successfully pressured Kohl's (KSS) to remake its board, and CEO Jonathan Duskin says, "we almost don't think of ourselves as activists. We identify companies that stubbed their toe and could use some help." According to Duskin, Macellum "first works more constructively with the board," and "our brand of activism is more like private equity in the public markets." He said his firm looks for companies with "self-inflicted problems we think we can fix and where we think we can put people on the board to help fix it." Duskin adds that the question becomes, "Are shareholders going to join us in this endeavor or say go play in another sandbox?" Macellum invests in undervalued companies with potentially higher values through revisions to corporate strategy or governance, improvements in operations, and capital apportionment. "I can't believe more companies don't invite activists to speak to their boards, but once the campaign starts, the defense—the bankers and counsel—everyone, they are generally open to listen. They want to hear your perspective," Duskin explains. He says many board members fight to hold onto their seats out of a sense of entitlement, but "the easiest thing a board can do is refresh themselves. Bed Bath & Beyond [BBBY] did it. Kohl's just did it. They can adopt a lot of the initiatives you are focused on. Cost-cutting is a freebie. We [Macellum] are not short-termers. I don't try to nominate myself to go on boards." Meanwhile, Adam Rifkin at Guggenheim Securities recommends that boards review strategic and financial options every six to 12 months. He echoes Duskin's observation that "in many situations, boards take a long-term approach to everything they are doing and many activists take a short-term perspective." Rifkin also notes many retail boards follow "insular behavior continuing to do things the way they have always done things and failing to transition their business, from a strategic standpoint or reallocating assets or restructuring their balance sheets. Generally, retailers and consumer companies that continue to reinvent themselves, moving their businesses forward, are the ones that don't run into problems with activists."
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