Activism, Featured, Latest Research

Activism Update – June 7

Published: June 9, 2024

Activism Snapshot

Egon-Jones joined ISS and Glass Lewis in supporting all nine of WisdomTree’s (WT) board nominees. In the Glass Lewis report they stated “the board has made meaningful strides to empower its newer directors” and ISS said “there is no case for incremental change at this juncture”. WT defends the long-tenures of Anthony Bossone (15+ years), Win Neuger (10+ years) and Jonathan Steinberg (16+ years) stating it provides stability and preserves institutional knowledge. Given their C, C-, C Boardroom Alpha ratings and delivering 3%, -1%, and 3% annualized TSR (respectively), we’d suggest that these directors are riding a wave of recent performance that has made their tenures look better than it is. The better defense is that the board is actually actively refreshing with 6 new directors in just the last few years and that they expect this to continue. Though, ETFS Capital rightly points out that its activism has led to many of the improvements to the board including the refreshment and declassification.

Glass Lewis recommended Medallion (MFIN) shareholders vote for the board’s nominees and MFIN was fast to promote the fact by placing advertising via google and other online display advertising. We find any company’s argument that an activist is “self-serving” laughable given everyone involved at a company — the employees, the management, the investors (including activists) — are all trying too make money in their own self-serving interests. The reality of the MFIN situation is that the company’s performance is underwhelming, the board has long-serving directors with underwhelming track records (evidenced by lower Boardroom Alpha ratings and low TSRs over their tenures), and their governance has issues. From the outside perspective, it seems reasonable to ask whether the current MFIN board and executives are the right team to drive outperformance and materially increase shareholder value.

F9 Investments continued to hammer home their case that the LL Flooring (LL) management team has made major strategic mistakes (e.g. dropping the well-known Lumber Liquidator brand name) resulting in the destruction of shareholder value with the stock dropping over 93% in the last three years. F9 Investments also cites concerns voiced by other large LL Flooring shareholders including Donovan S. Royal and Howard Jonas on behalf of a consortium of shareholders. As the reader can see from the LL stock price graph to the right, it’s been a disastrous 3-year period with the stock plummeting and rife with red flags. Those red flags include the recent going concern risk (ie the company may go out of business) cited by the company’s auditors.

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ACTIVISM UPDATE

LATEST 13-D FILINGS

FILED	TICKER	COMPANY	FILED BY	OWNERSHIP	1-Year TSR	SUMMARY	FILING
2024-06-05	BHIL	BENSON HILL INC	iSelect Fund Management, LLC	7.6%	-84.7%	In discussions with the management and board about strategic options.	2024-06-05 – SC 13D
2024-06-03	TALO	TALOS ENERGY INC	Carlos Slim Helu	20.5%	-20.0%	Increased their position to just over 20% of TALO	2024-06-03 – SC 13D
2024-06-03	WSR	WHITESTONE REIT	MCB PR Capital LLC	9.4%	57.9%	MCB offering $700M to acquire WSR.	2024-06-03 – SC 13D

LATEST PROXY CONTEST FILINGS

TICKER	COMPANY	TSR 1/3yr	MEETING DATE	LATEST PROXY	SUMMARY	TARGET FILINGS	ACTIVIST FILINGS
BHR	BRAEMAR HOTELS & RESORTS INC	-21.9% -45.5%	Jul 30	2024-04-11 – PREC14A	Nominating four directors: Michael Cricenti, Jennifer M. Hill, Betsy L. McCoy and Steven J. Pully Proposal to remove “overreaching” advance notice bylaw provision Proposal to urge the Board to amend the Bylaws to preclude any current or former employee, director, officer, or control person of the Corporation or Ashford (as defined in the Proxy Statement) and Ashford’s affiliates from serving as the Corporation’s chairman of the Board Proposal to require the Board to disclose all extraordinary transaction proposals made by stockholders, affiliates and third parties during the two most recently completed calendar years and the terms of those proposed transactions Proposal to require the Board to disclose all compensation paid by the Corporation to members of the Bennett family, The Dallas Express and employees, directors or agents of The Dallas Express, including Louis Darrouzet	BRAEMAR HOTELS & RESORTS INC May 23 – DEFA14A May 22 – DEFA14A May 22 – DEFA14A May 21 – DEFA14A May 20 – DEFA14A May 17 – DEFA14A May 16 – DEFA14A May 15 – DEFA14A May 15 – DEFA14A May 14 – DEFA14A	BLACKWELLS CAPITAL LLC May 20 – DFAN14A May 17 – DFAN14A May 16 – DFAN14A May 16 – DFAN14A May 13 – DFAN14A May 10 – DFAN14A May 09 – DFAN14A May 08 – DFAN14A May 07 – DFAN14A May 03 – DFAN14A
EHAB	ENHABIT INC	-31.0%	TBD	2024-05-28 – PREC14A	AREX Capital owns 4.8% of the shares of Enhabit (EHAB) AREX Capital believes EHAB strategic review should have resulted in a sale of the company. AREX Capital believes EHAB board lacks “Health and Hospice” expertise AREX nominating 7 directors to the board: Megan Ambers, James T. Corcoran, Maxine Hochhauser, Mark W. Ohlendorf, Anna-Gene O’Neal, Dr. Gregory S. Sheff, Juan Vallarino.	ENHABIT INC May 23 – PREC14A May 23 – DEFA14A	AREX CAPITAL MANAGEMENT, LP May 29 – DFAN14A May 28 – PREC14A May 09 – DFAN14A
LL	LL FLOORING HOLDINGS INC	-66.0% -92.9%	Jul 10	2024-05-31 – DEFC14A	Seeking to elect 4 directors: Thomas D. Sullivan, John Jason Delves and Jill Witter Recommending voting “WITHHOLD” for company nominees: Douglas T. Moore, Ashish Parmer and Nancy M. Taylor F9 group includes Mr. Sullivan who founded the company in 1994 and served as Chair through 1994 F9 previously made a bid to acquire the company for $5.76 per share — a 100% premium to the then 52-week low of $2.75	LL FLOORING HOLDINGS INC Jun 07 – DFAN14A Jun 07 – DEFA14A Jun 05 – DEFA14A Jun 03 – DEFA14A Jun 03 – DEFA14A Jun 03 – DEFA14A May 31 – DEFA14A May 24 – DEFC14A May 20 – PREC14A May 20 – DEFA14A	F9 INVESTMENTS LLC Jun 03 – DFAN14A Jun 03 – DFAN14A May 31 – DFAN14A May 31 – DEFC14A May 28 – PRRN14A May 20 – PREC14A
MASI	MASIMO CORP	-24.2% -40.9%	TBD	2024-06-03 – PREC14A	Politan Capital, owning ~9% of MASI, has nominated two directors to the board of Masimo Politan Capital previously won two board seats at last year’s shareholder meeting Politan has nominated William Jellison, former CFO of Stryker and Darlene Solomon, former CTO of Agilent Technologies Politan paints a picture (see their filings) of MASI being uncooperative and freezing their board members out Masimo (see their filings) refutes Politan’s claims	MASIMO CORP May 31 – PREC14A May 31 – DEFA14A May 31 – DEFA14A May 20 – DEFA14A May 16 – DEFA14A May 13 – DEFA14A May 13 – DEFA14A May 09 – DEFA14A Apr 02 – DEFA14A Apr 01 – DEFA14A	POLITAN CAPITAL MANAGEMENT LP Jun 03 – PREC14A Jun 03 – DFAN14A May 10 – DFAN14A Mar 25 – DFAN14A
MFIN	MEDALLION FINANCIAL CORP	23.2% -0.1%	Jun 11	2024-04-29 – DEFC14A	ZimCal looking to add Stephen Hodges and Judd Deppisch to the board ZimCal flags long-term underperformance with Medallion down 40% over the last 10 years and heightened near-term risk from subprime exposure ZimCal has published a site supporting its case at: https://restoretheshine.com/	MEDALLION FINANCIAL CORP Jun 04 – DEFA14A Jun 04 – DEFA14A May 31 – DEFA14A May 28 – DEFA14A May 24 – DEFA14A May 22 – DEFA14A May 21 – DEFA14A May 20 – DEFA14A May 13 – DEFA14A Apr 29 – DEFC14A	ZIMCAL ASSET MANAGEMENT, LLC Jun 04 – DFAN14A Jun 03 – DFAN14A May 30 – DFAN14A May 29 – DFAN14A May 29 – DFAN14A May 28 – DFAN14A May 24 – DFAN14A May 21 – DFAN14A May 21 – DFAN14A May 16 – DFAN14A
MRC	MRC GLOBAL INC	38.0% 13.5%	TBD	2024-03-19 – PREC14A	Nominating two directors to the board: Brad Favreau and Daniel Silvers Engine Capital believes that MRC is significantly underperforming, especially relative to DNOW Inc. Engine Capital believes that MRC’s inability to settle it’s ongoing dispute with Cornell Capital is preventing MRC from optimizing capital structure Engine Capital believes that MRC’s M&A strategy is flawed and that CEO Rob Saltiel does not have a successful track record in acquisitions or integrations	MRC GLOBAL INC Apr 02 – DEFA14A Mar 19 – DEFA14A	ENGINE CAPITAL, L.P. Mar 19 – PREC14A Mar 19 – DFAN14A
NVAX	NOVAVAX INC	149.1% -89.3%	TBD	2024-05-06 – PREC14A	Shah Capital Management intends to vote against Novavax directors Richard H. Douglas, Margaret G. McGlynn, and David Mott Shah Capital Management believes that Novavax is undervalued and continues to suffer from poor profitability, despite the substantial value to be unlocked in the Company’s Matrix-M adjuvant platform and non-mRNA protein vaccine portfolio. Shah Capital Management met with management and the board multiple times over the course of 2023 and 2024, but believes Novavax has been unresponsive to their suggestions.	NOVAVAX INC Jun 05 – DEFA14A Apr 29 – DEFA14A	SHAH CAPITAL MANAGEMENT May 20 – DFAN14A May 13 – DFAN14A May 08 – DFAN14A May 07 – DFAN14A May 06 – PREC14A May 06 – DFAN14A
SLRX	SALARIUS PHARMACEUTICALS INC	-73.3% -98.6%	TBD		Mismanagement and Poor Performance: The letter claims that Salarius Pharmaceuticals is mismanaged by its current Board and management, leading to a significant decline in shareholder value and underperformance of the company. Compensation Issues: The letter criticizes the Board for failing to establish a culture of accountability, highlighting excessive and poorly justified salary increases and stock option grants to executives despite the company’s poor performance and declining stock price. Misaligned Incentives: The author points out that the Board members and executives hold a minimal percentage of the company’s shares and have not made open market purchases, indicating a lack of alignment with shareholder interests. Questionable Decisions and Lack of Transparency: The letter accuses the Board of engaging in “curious compensation practices” and “disclosure diffusion,” making it difficult for shareholders to get a clear understanding of executive compensation and undermining informed voting. Call for Change: The activist argues for the need for new Board members with fresh perspectives and better alignment with shareholder interests, expressing a lack of confidence in the current Board’s ability to improve the company’s performance and accountability.	SALARIUS PHARMACEUTICALS INC Mar 26 – DEFA14A	ELVIN LEE Mar 20 – DFAN14A
SPRU	SPRUCE POWER HOLDING CORP	-40.9% -93.9%	TBD	2024-04-17 – PREC14A	Clayton Partners, JSCC Family Trust, and Jason Stankowski are contesting the proxy Clayton is nominating Jason Stankowski and Clara Nagy McBane to the board Clayton believes the company is not being managed to the benefit of its shareholders — believes “Spruce is, at worst, a break-even business and has significant opportunities for positive cash flow generation going forward” Clayton disagrees with the company not buying back any stock despite trading at a 25% discount to the estimated value of the stock	SPRUCE POWER HOLDING CORP	CLAYTON PARTNERS LLC May 31 – PRRN14A Apr 18 – DFAN14A Apr 17 – PREC14A
WT	WISDOMTREE INC	42.4% 49.0%	Jun 12	2024-05-03 – DEFC14A	ETFS Capital owns approximately 10% of Wisdom Tree (WT) and believes “immediate action to unlock significant value for all stockholders and halt further value destruction.” Puts a focus on WT’s strategy of transitioning to a decentralized finance (DeFi) business and believes that it resulted in poor management of the core, profitable ETF business. Believes the company’s true value lies in its ETF business, which suffers from poor profitability despite record assets under management. Believes its attempts to be collaborative have been met with ” a public and bafflingly hostile response.” Seeking	WISDOMTREE INC Jun 06 – DEFA14A Jun 06 – DEFA14A Jun 03 – DEFA14A May 31 – DEFA14A May 23 – DEFA14A May 23 – DEFA14A May 13 – DEFA14A May 06 – DEFA14A Apr 30 – DEFA14A Apr 29 – DEFC14A	ETFS CAPITAL LIMITED Jun 04 – DFAN14A Jun 03 – DFAN14A May 28 – DFAN14A May 21 – DFAN14A May 14 – DFAN14A May 06 – DFAN14A May 03 – DFAN14A May 03 – DEFC14A Apr 30 – PRRN14A Apr 18 – DFAN14A

RECENT COOPERATION AGREEMENTS

TARGET	1-Year TSR	ACTIVIST	SUMMARY	FILING	DATE	STOCK CHANGE	DAYS SINCE
ANIKA THERAPEUTICS INC (ANIK)	-1.8%	Caligan Partners LP	Increasing board to 10 directors Appointing William Jellison as an independent Class I director (2024) and Joseph Capper as an independent Class II (2025) Board will nominate and support Jellison at 2024 annual meeting Mr. Jellison and Mr. Capper will be appointed to the Capital Allocation Committee Board size will decrease to 9 directors at 2024 annual meeting Company agreed to implement a share repurchase program	View Filing	2024-05-28	6.0%	10
PRESIDIO PROPERTY TRUST INC (SQFT)	-6.2%	Zuma Capital Management	Zuma Capital Management withdraws its letter notifying Presidio of its intention to nominate directors Cooperation agreement in effect until 2026 annual shareholder meeting Board increased from 6 to 7 directors Elena Piliptchak added as a Class III Director with term expiring at 2026 meeting Elena Piliptchak to be placed on Nominating & Governance and one of the Audit, Compensation or new Strategy committees Zuma must maintain minimum of 3% ownership	View Filing	2024-05-09	-4.1%	29
ALIGHT INC (ALIT)	-13.7%	Starboard Value	Increased board from 9 to 11 Appointed Dave Guilmette and Coretha Rushing Annual meeting to be held no later than July 26, 2024	View Filing	2024-05-06	-18.7%	32
APPLIED DIGITAL CORP (APLD)	-47.4%	Oasis Management Co Ltd.	Appointed Ella Benson, an employee of Oasis, to the Company’s Board of Directors	View Filing	2024-05-01	81.9%	37
ZUORA INC (ZUO)	-11.9%	SCALAR GAUGE MANAGEMENT, LLC	Appointed John D. Harkey, Jr. to the board	View Filing	2024-05-01	1.5%	37
TRIUMPH GROUP INC (TGI)	27.7%	Vision One Management Partners, LP	Including Courtney R. Mather for election as a director at the 2024 shareholder meeting Appointed Julio C. Acero, an Investment Analyst of Vision One, as a board advisor	View Filing	2024-05-01	13.1%	37

RECENT PROXY CONTEST RESOLUTIONS

TICKER	COMPANY	MEETING DATE	RESULTS	ACTIVIST SITUATION SUMMARY
SBOW	SILVERBOW RESOURCES INC	May 29 (adjourned from May 21)	On May 22, 2024 Kimmeridge withdrew its nominees in light of the Silverbow’s pending sale to Crescent Energy Ben Dell, Co-Founder and Managing Partner of Kimmeridge, said, “While we are disappointed that SilverBow’s Board does not appear to have run a comprehensive sales process, our campaign was always underpinned by a strong belief that consolidation is in the best interests of shareholders.” Read SilverBow’s sale announcement here	SilverBow Resources has rejected multiple offers, over the past two years, by Kimmeridge Energy Management — the latest offer valued SBW at $2.1 billion SilverBow believes the offer substantially undervalues the company Kimmeridge holds a 12.9% stake in SilverBow, along with Riposte Capital, the second-largest shareholder Kimmeridge is also attempting to get 3 directors onto the board SilverBow has rejected the three nominees citing concerns over their independence and representation of all shareholders’ interests May 21st meeting was adjourned to “allow additional time for recent developments to be considered by shareholders” Shareholder meeting will reconvene on May 29th, 2024
XPER	XPERI INC	May 24	Xperi announced that all 5 incumbent directors were elected at the May 24th meeting.	Rubric Capital opposes 2 of the 5 directors up for re-election: Deborah S. Conrad and Thomas A. Lacey Rubric filed their first 13 D on January 23, 2024 Rubric sent XPER board a letter on January 22, 2024 nominating their directors Xperi began trading as a separate company on Oct 1, 2022 after spinning out of Xperi Holding (no named Adeia Inc) Xperi is down nearly 30% since the spin-off Xperi has an elevated Boadroom Alpha Activist Vulnerability Score and C- average board rating CEO Kirchner was paid $9.9M in 2022 despite the significant shareholder losses Xperi powers the next generation of smart devices, automobiles and entertainment experiences of all kinds
GNK	GENCO SHIPPING & TRADING LTD	May 23	All Genco directors were elected with over 85% support Say-on-Pay received 87% support Genco said: “We believe that the decisive results of this meeting reflect our shareholders’ confidence in Genco’s Board of Directors and management team and our Comprehensive Value Strategy.” Full voting results: 8-K 5.07	GK Investor / George Economou has provided notice that it is nominating 2 directors: Randee Day and Robert M. Pons George Economou: “As a significant Genco shareholder, I strongly believe in the Company’s potential to deliver improved value for shareholders. Both Randee and Robert have highly relevant backgrounds that would, in my view, be additive in the boardroom and would help address Genco’s lagging performance. I believe the entire Board would benefit from their fresh perspectives and collective knowledge of the maritime and technology sectors and experience in finance, corporate strategy and governance.”
CCI	CROWN CASTLE INC	May 22	Crown Castle (CCI) announced via press release that all 12 of the company’s nominees were elected to the the board. There was no mention of vote counts, so we’ll need to wait for the official 8-K 5.07 to be filed.	Crown Castle Inc. is facing a proxy battle initiated by its co-founder, Ted B. Miller, and his investment vehicle. Ted B. Miller criticized the Board’s actions, asserting that they wasted shareholder resources during a period of significant value destruction. Boots Capital called for immediate change, advocating for new independent directors and a fresh start. Miller points to Crown Castle’s board rewriting its cooperation agreement with Elliott Management as an admission that the initial process was tainted. The rewritten agreement still did not require Elliott to maintain an equity position in the company. Miller has filed a lawsuit to invalidate Crown Castle’s cooperation agreement with Elliott.

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