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Ad-Hoc Insights: Intriguing Activist Targets

This is an ad-hoc insight we sent out to premium subscribers last week. Interested? Sign up for a 1-week free trial to Activist Strategy today.

Here’s a look at what’s going down in the activist investing world.

TOP 10 ACTIVIST TARGETS WITH THE MOST UPSIDE. We’re taking to task the 10 worst performing activist targets that have been started in 2016. 

Journal Media is one of the most interesting names on the list. Water Island is activist, but so is GAMCO. The activists are trying to convince the company to demand more company from Gannett given its real estate value. Qlik Technology is right in Elliott’s wheelhouse. TeamHealth is the focus of our deep dive this week. Rightside is a name we’re digging into.

OTHER NOTABLES.

  1. Still no fan of Yahoo. They’re trying to block Starboard Value’s proxy battle attempt by adding new board members.

  2. Bank of New York Mellon is upping its CEO, Gerald Hassell, compensation by 16%. Marcato Capital went activist last year to try and break up the company, including ousting Hassell. However, Trian Partners also got involved and has a board seat. Trian’s on Hassell’s side and against a split. Without a split, Bank of New York Mellon is dead money.

  3. David Neuhauser of Livermore Partners on Volt Information Services says that while he's been "extremely frustrated by the price action, VISI's new board and management are making the right moves to transform Volt into a true global operating company that has the potential to compete again. "Years of mismanagement have (to be) factored into the equation, so the turnaround -- even with new management -- will take time. That said, the non-core-asset sales we pushed for back in 2014 are taking hold. VISI should in fact be near net debt free by summertime, with total non-core-asset sales to bring forth $60 million to 90 million in cash. This would allow VISI to buy back shares as revenues turn up, and therefore, the leverage of the new operating model -- with more than $10 million in lower costs -- allows strong cash flow and eventually earnings per share, providing an avenue for the company to use its more than $140 million NOL and shield taxes. Trading at 0.11x sales and soon to be net debt free with a true turnaround occurring, the equity has much potential. It has been a long road, but the opportunity to 're-rate' the equity is finally in front of us today. This is a true dislocation of value and one to be bought, although management and the board must be bold and close the gap on what is now a 50%+ gap to its true intrinsic value."

  4. Autodesk put three new directors to its board, caving to the likes of Sachem Head Capital and Eminence Capital - collectively owning 10%. Autodesk made some serious coin off CDK Global and might be looking to do the same with Autodesk, i.e. navigating the shift toward the cloud and subscription model.  

  5. United Continental gets union backing. United Continental, which was plunged into a proxy battle earlier this week, is getting important backing from two big unions that have voting representation on its newly augmented 15-member board.TeamHealth Holdings outsources staffing to health-care providers, invested at a cost of $39 a share. Jana Partners is waging a battle for board seats. Amsurg tried buying the company for $71 a share in October.