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Daily Activism June 6: SEC ain't got shit on me

Activist follower, we’ve been taking calls from the request line and keeping with the trend - lots of news and stories for June 5 - as usual the free newsletter is on a 24-hour delay; Activist Strategy subscribers get it on publication day [you can get a 2-week free trial here]; tip us off at @activiststocks and here’s the free daily newsletter sign up.

News-

  • Bulldog Investors is now active at Full Circle Capital with a 5.7% stake, simply noting that shares are undervalued.

  • Clinton Group blows completely out of its activist target Everyware Global.

  • Sardar is doing a tender offer at Biglari Capital via the Lion Fund II - looking to buy 575,000 shares at $420 - ultimately taking its stake up to 47.5% [story to follow]

  • Vertex Capital takes GSI Technology to task in a letter over poor performance. They own 9.9% and have been active since early 2015 [story to follow]

Stories-

  • @Recode takes to task the idea of LinkedIn being an activist target, given its dual class structure - something that’s not uncommon with the new tech stocks. At LinkedIn, class B shares have 10x the voting power [link]

  • @stephengandel does a deeper dive into how Peltz almost pulled off the win at DuPont, with the vote being closer than previously thought. Specifically, “According to a new vote tally DuPont released on Wednesday, Peltz received 46% of the votes cast in the proxy fight. The new filing showed that Peltz garnered roughly 27 million more votes than earlier thought [link to Stephen’s Fortune piece] As we mentioned over the weekend, “Peltz could have won. The issue is that passive investors and index funds (like Blackrock and Vanguard) are all for a good corporate governance change story, but what they’ve been shown to not like (i.e. vote against) is restructurings” [link to our weekend piece, partial paywall] Stephen notes that “...it is believed, and has been reported, that Blackrock, Vanguard, and State Street, DuPont’s fourth largest shareholder, voted to keep the chemical giant’s board in place, and not add Peltz or his other nominees. Take those three shareholders out of the equation, and Peltz got 58% of the remaining vote.” Interesting results indeed.

  • The SEC is taking to task activist funds over collusion - requesting info from unnamed funds to figure out if they participated in ‘wolfpack activism’ without disclosing it. Phil Goldstein of Bulldog Investors - who had a heated battle with the SEC many years ago - had an entertaining take on multiple activists in the same stock ““If you go to a Grateful Dead concert, you’re going to find a lot of Grateful Dead fans,” he said. “They’re not a group. They just like the same music” [WSJ piece]

  • The Economist has a longish read on activism and corporate governance change in Japan. There’s still a lot of work to be done, but there are interesting opportunities there. Something we plan on talking about more via Activist Strategy, but of note, “The government’s aim is certainly far more ambitious than getting firms to distribute some of their vast cash piles. It wants to see Japanese industry regaining its global competitiveness. One important reason for the slippage has been quiescent boards. Although Japanese boards are no longer the charade they might have been in the past" [Economist piece]

What we’ve been working on-

  • Cash for coal in the activist industry [complete paywall]

  • Larry Robbins: Activist in sheep’s clothing [complete paywall]