Activism, Featured, Latest Research

Activism Update – June 28

Published: June 28, 2024

Activism Snapshot

The Blackwells vs. Braemer Hotels (BHR) fight rolls on with continued sniping each way. However, there is a significant change as BHR has postponed the annual meeting two and half months going from July 30th to October 15th.

Enhabit (EHAB) issued a letter to stockholders in order to “address misstatements made by AREX Capital Management.” Arex released what it called a “Comprehensive Plan to Deliver Enduring Value for Enhabit Stockholders.” The Arex presentation is available at their campaign website: www.rehabehab.com.

LL Flooring Holdings (LL) announced that it is making progress in toward selling its Sandston, Virginia distribution center. But, alongside that potentially positive news is notified shareholders that it may not have sufficient liquidity to meet its requirements under their asset-backed revolving facility credit agreement. Activist F9 pushed on LL’s liquidity problems in their latest campaign activity.

Masimo (MASI) published a presentation pushing its case that its team has the right track record and plan, while Politan is a risk to shareholders. Part of MASI’s case is that Politan’s track record as a member of the board over the past 12 months doesn’t suggest that giving more power to Politan is not in the best interest of shareholders. Politan launched their campaign website, www.AdvanceMasimo.com, which lays out its case against MASI’s board. Politan also released a detailed letter going in-depth on the MASI’s performance under the current board, including how it is trailing even its own selected peer set on total shareholder return measures.

Arex Capital makes its case against EHAB

Latest Activism and Governance research from Boardroom Alpha:

ACTIVISM UPDATE

LATEST COOPERATION AGREEMENTS

TARGET	1-Year TSR	ACTIVIST	SUMMARY	FILING	DATE	STOCK CHANGE	DAYS SINCE
SPRUCE POWER HOLDING CORP (SPRU)	-50.3%	Clayton Capital	Increase board from 6 to 7 directors Appoint Clara Nag McBane to the board as a class B director Ms. McBane will join the Compensation and Nominating and Corporate Governance Committees. Clayton cannot acquire more than 14.9% of the company Agreement lasts until company decides not to nominate Ms. McBane at the 2025 meeting, at closing of 2025 meeting, or no later than Augusts 31, 2025. Ms. McBane, age 37, is the founder and Chief Executive Officer of Ventura Energy Partners LLC, which is a developer of behind-the-meter and community sized solar and storage systems	View Filing	2024-06-21	8.5%	7
CULP INC (CULP)	-5.9%	22NW Fund, LP	Expanded board from 8 to 9 members. Appointed Mr. Alexander B. Jones to the board and will nominate him at the 2024 annual shareholder meeting. Mr. Jones will be appointed to the Audit and Compensation committees. Activist cannot have more than 15% ownership during the standstill period.	View Filing	2024-06-17	3.0%	11
AMERISERV FINANCIAL INC (ASRV)	-.2%	Driver Management Co LLC	Driver agreed to withdraw its notice of intent to nominate three directors at the upcoming shareholder meeting. Driver agreed to drop their lawsuits filed against AmeriServ for a settlement fee of $1,762,659. AmeriServ agreed to repurchase 628,003 shares from Driver at a total cost of $1,494,647.	View Filing	2024-06-13	0.4%	15
FORTE BIOSCIENCES INC (FBRX)	-47.8%	Camac Fund, LP	The FBRX board will expand to nine seats. One incumbent director will resign and two directors will be selected from a Camac list of five options. The FBRX board will create a committee to explore strategic altenratives for the company. Camac and FBRX will settle their legal case. The agreement runs through the 2028 annual shareholder meeting. As of the agreement date, Camac held 3.5% of FBRX’s outstanding stock.	View Filing	2024-06-11	-0.4%	17

LATEST 13-D FILINGS

FILED	TICKER	COMPANY	FILED BY	OWNERSHIP	1-Year TSR	FILING
2024-06-27	AE	ADAMS RESOURCES & ENERGY INC	THG Securities Fund, L.P.	5.3%	-17.0%	2024-06-27 – SC 13D
2024-06-26	DXLG	DESTINATION XL GROUP INC	Fund 1 Investments, LLC	9.8%	-30.2%	2024-06-26 – SC 13D
2024-06-26	VRA	VERA BRADLEY INC	Fund 1 Investments, LLC	9.8%	-4.4%	2024-06-26 – 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	-31.6% -53.3%	Oct 15 (postponed from July 30th)	2024-06-17 – DEFC14A	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 Jun 27 – DEFA14A Jun 26 – DEFA14A Jun 25 – DEFA14A Jun 24 – DEFA14A Jun 24 – DEFA14A Jun 21 – DEFA14A Jun 20 – DEFA14A Jun 18 – DEFA14A Jun 17 – DEFC14A Jun 17 – DEFA14A	BLACKWELLS CAPITAL LLC Jun 21 – DFAN14A Jun 20 – DFAN14A Jun 18 – DFAN14A Jun 17 – DFAN14A Jun 14 – DFAN14A Jun 13 – DFAN14A Jun 12 – DFAN14A Jun 11 – DFAN14A Jun 10 – DFAN14A May 20 – DFAN14A
EHAB	ENHABIT INC	-28.6%	Jul 25	2024-06-11 – DEFC14A	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 Jun 24 – DEFA14A Jun 18 – DEFA14A Jun 17 – DEFA14A Jun 12 – DEFA14A Jun 11 – DEFA14A Jun 10 – DEFC14A Jun 10 – DEFA14A May 23 – PREC14A May 23 – DEFA14A	AREX CAPITAL MANAGEMENT, LP Jun 27 – DFAN14A Jun 26 – DFAN14A Jun 17 – DFAN14A Jun 11 – DFAN14A Jun 11 – DEFC14A Jun 10 – PRRN14A May 29 – DFAN14A May 28 – PREC14A May 09 – DFAN14A
LL	LL FLOORING HOLDINGS INC	-60.8% -92.8%	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 28 – DEFA14A Jun 28 – DFAN14A Jun 18 – DEFA14A Jun 18 – DEFA14A Jun 17 – DEFA14A Jun 17 – DEFA14A Jun 11 – DEFA14A Jun 11 – DEFA14A Jun 07 – DEFA14A Jun 05 – DEFA14A	F9 INVESTMENTS LLC Jun 27 – DFAN14A Jun 25 – DFAN14A Jun 20 – DFAN14A Jun 14 – DFAN14A Jun 13 – DFAN14A Jun 07 – DFAN14A Jun 03 – DFAN14A Jun 03 – DFAN14A May 31 – DFAN14A May 31 – DEFC14A
MASI	MASIMO CORP	-19.2% -46.1%	Jul 25	2024-06-21 – DEFC14A	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 Jun 26 – DEFA14A Jun 20 – DEFA14A Jun 20 – DEFA14A Jun 17 – DEFC14A Jun 17 – DEFA14A Jun 17 – DEFA14A Jun 12 – DEFA14A May 31 – PREC14A May 31 – DEFA14A May 31 – DEFA14A	POLITAN CAPITAL MANAGEMENT LP Jun 26 – DFAN14A Jun 26 – DFAN14A Jun 26 – DFAN14A Jun 26 – DFAN14A Jun 21 – DEFC14A Jun 20 – PRRN14A Jun 14 – PRRN14A Jun 03 – PREC14A Jun 03 – DFAN14A May 10 – DFAN14A
MRC	MRC GLOBAL INC	21.8% 26.5%	TBD		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	ENGINE CAPITAL, L.P.
NVAX	NOVAVAX INC	92.4% -93.2%	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	-78.1% -98.9%	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	ELVIN LEE

RECENT PROXY CONTEST RESOLUTIONS

TICKER	COMPANY	MEETING DATE	RESULTS	ACTIVIST SITUATION SUMMARY
MFIN	MEDALLION FINANCIAL CORP	Jun 11	Medallion Financial won this fight with shareholders electing the board’s two nominees with ~77% of the vote. Shareholders also supported the board’s executive compensation plan via the Say-on-Pay vote at ~74% support.	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/
WT	WISDOMTREE INC	Jun 12	WisdomTree, Inc. (WT) released a press release on June 12th announcing that all nine WT nominees were elected. WT said “Voters repudiate ETFS Capital And Graham Tuckwell” WT also said all other proposals, including say-on-pay for the year and say-on-pay frequency passed. The 8-k with certified results will help provide better insights into the actual support levels as there is no mention in the press release.	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.”

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