Investment idea generation.

Blog

Our thoughts.

Blurring The Activist Hedge Fund Line

Activist news for May 6 below. Hit reply with the stories you want to know more about. If you want this in your inbox each morning, please sign up here.

Stake changes

  • Carlson Capital goes activist on Archrock with a 13.3% stake. Says shares trade at a substantial discount to the Issuer’s intrinsic value and represent an attractive investment opportunity. Intends to have discussions with management about expenses, capital allocation, etc.

  • Legion Partners goes activist on CIBER with a 6.7% stake. Hasn’t laid out any plans.

  • Mittleman Brothers takes its Carmike Cinemas stake up 20%, now owns 9.6%.

  • Biglari Holdings goes activist on Unico American Corporation with a 9.5% stake. They anticipate engaging  with management.

Major🔑 Alert - We’re less than two weeks from the next edition of the quarterly activist newsletter. Sign up today before prices go up on May 15th.

News

  • Elliott Management sends letter to CDK Global with a plan to optimize the operations and capital structure. Also pushing the company to explore a sale in order to carry out the plan without the pressures of a public company. Letter here [link]

  • Engine Capital gets two directors for the Sparton board. Been activist since March and still owns 3.7%.

  • Energy Transfer Equity and Williams Companies disclosed an amendment to the companies’ proposed merger reducing the time between when stockholders elect the form of merger consideration and the anticipated closing date.

  • Greenlight Capital talks about Yelp in its latest investor letter [linked here]. Greenlight purchased the shares at an average price of $21.16 a share. Says shares worth $55. By freeing up some time ahead of the 28 June deadline when either party can walk away, the amendments could pave the way for the two sides to renegotiate terms of the deal

  • Carlson Capital target GNC is taking up a strategic review of strategic and financial alternatives to increase shareholder value. It’s evaluating the existing operating plan, accelerating refranchising strategies, optimizing capital structure, partnerships and other collaborations as well as the potential sale of GNC.

  • TICC Capital major shareholder TPG Specialty Lending sent a letter to the TICC’s board voicing its concerns about the future of the investment company. In the letter [linked here] TSLX raises several issues that the company should address. According to TSLX, TICC needs a new investment strategy and capital allocation policies, as well as changes to the composition of the board. TSLX also believes that the board is deliberately postponing the announcement for the AGM to stop shareholders from approving TSLX’s proposal to nominate Kelley Millet to the board and to terminate the agreement between TICC and its external manager.

  • Baker Hughes activist ValueAct Capital sees the actions the company has taken since the termination of its merger with Halliburton as steps in the right direction, making the prospect for an immediate call to break up Baker Hughes less likely, it is understood.

  • Voce Capital Management owns 5.3% of FBR & Co. has filed a preliminary proxy statement and intends to proceed with its nomination of three directors.

  • A group of Altisource Residential’s shareholders led by activist BLR Partners have filed a definitive proxy statement to seek support for their board nominees Andrew Platt, Clifford Press and Joshua Schechter at the June 1st annual meeting. They own 2.5%. They claim RESI’s board is destroying shareholder value with its failed strategies. Also, the current board is either directly or indirectly connected to RESI external manager Altisource Asset Management Corporation and external service provider Altisource Portfolio Solutions and is more committed to transferring value to these outside sources than to RESI. For this reason, the group feels that there is a need for board changes, especially the addition of independent directors.

Stories

  • Hedge funds are shaking up the companies behind the brands you know and love [link] "The distinction between who is an activist and who is not is becoming increasingly blurred and less relevant overall," he said. "More mainstream investors, including index funds, are engaging with boards and management teams," said Barg. In other words, we're in "an age of more active and sustained engagement" between boards and shareholders, as activism becomes more mainstream.

Other good reads

  • Activist investors rarely meet expectations, say top dealmakers [link]

  • Rolls-Royce boss to announce turnaround plan is working [link]

Exclusives

  • ICYMI Update on Wynnefield Capital’s big target [link]

  • ICYMI Stealthy activist at Progress Software [link]

Read up on shareholder activism

  • The Proven Framework for Finding the Best Value Investments [link]

This is the new daily activist investing newsletter. Interested in getting it in your inbox, subscribe here.