DEF14 Monthly Knowledge+: December 24 Activist Investor Campaign Highlights

Happy New Year! ?? This is our final Knowledge+ of 2024, and we’re excited to see how shareholder activism evolves in the coming year. As we wrap up December, we tracked two new 13D filings—an insightful way to close out an eventful year. Scroll down to dive into the details of each campaign and join us in looking ahead to what’s next in 2025!

Alta Fox Opportunities Fund

(I)? DAKTRONICS INC

Activist investor Alta Fox Capital plans to nominate board candidates at Daktronics, citing governance issues such as a staggered board and a poison pill plan. Alta Fox, which first acquired a stake in 2022, criticized nepotism within the company, including CEO Reece Kurtenbach and VP Matthew Kurtenbach, sons of Daktronics’ founder. The investor believes improved governance could raise the stock price to $40, nearly double its current value. This move may lead to a proxy fight, following failed private engagements to refresh the board.

Saba Capital

(I)? Voya Emerging Market High Dividend Equity Fund

Saba Capital Management acquired 906,850 shares of the Voya Emerging Markets High Dividend Equity Fund, representing a 5.02% stake, for approximately $5.43 million. The firm views the fund as undervalued and aims to engage with management, the board, and other stakeholders to address issues such as the fund trading at a discount to its net asset value.?

Other Significant Activist Campaigns Worldwide This Month

Ancora Pushes Amcor’s Bold Moves in Packaging

Activist investor Ancora, with a $100M stake in Berry Global, has been instrumental in shaping the packaging industry’s landscape. Following pressure from Ancora and Eminence Capital, Berry restructured its business, paving the way for Amcor’s $8.4 billion acquisition. Ancora predicts the deal could unlock $650M in synergies, driving Amcor's stock up by 50-70% and signaling transformative change in the sector.

Anson Funds Pressures Lionsgate for Strategic Changes

Anson Funds Management has taken a stake in Lionsgate Studios, urging the company to explore strategic options, including a potential sale, amid challenges like corporate governance issues and box-office flops. Sagar Gupta, Anson’s head of activism, highlighted the undervaluation of the studio behind The Hunger Games and John Wick, suggesting divestitures and alternative revenue streams such as merchandising and live events. Lionsgate’s upcoming separation from Starz could make it an attractive acquisition target for media and tech giants.

Palliser Capital Pushes for Rio Tinto Listing Unification

Activist investor Palliser Capital is intensifying efforts to unify Rio Tinto's dual-listed structure in London and Sydney, claiming it has failed shareholders. Backed by over 100 investors, Palliser plans to propose a resolution at Rio Tinto's next AGM to conduct an independent review of the structure. The hedge fund argues unification into a single Australian-domiciled holding company is essential for efficient operations and competitive mergers, following the example of BHP's consolidation in 2022. Rio Tinto has defended the dual structure, stating it remains economically sound.

Starboard Value Pushes Riot Platforms to Diversify into Data Centers

Activist investor Starboard Value has taken a significant stake in Riot Platforms, urging the bitcoin miner to convert some mining sites into high-performance computing (HPC) data centers. Starboard’s push aligns with a growing trend among miners, like Core Scientific, who are leveraging data centers for AI and cloud computing to diversify revenues. Riot has engaged with Starboard and expressed openness to shareholder input but has yet to announce any HPC-related deals.?

Browning West Pushes for Role in CAE CEO Selection Amid Underperformance

Activist investor Browning West has acquired a 4.3% stake in CAE Inc. and is urging the company to collaborate on selecting its next CEO following Marc Parent's retirement announcement. The investment firm highlighted CAE’s underperformance despite its strong market position, calling for a deliberate and inclusive recruitment process.

Engine Capital Takes Control of Dye & Durham, Appoints Interim CEO

Dye & Durham Ltd.'s board resigned ahead of its annual meeting, allowing activist investor Engine Capital to appoint its slate of nominees and take control. Hans T. Gieskes was named interim CEO and board chair, with Arnaud Ajdler serving as lead independent director. The shakeup follows Engine Capital's criticism of poor returns and lack of management accountability, signaling a new direction for the legal software company.

Carver Board Reelected Amid Activist Investor’s Transparency Demands

Carver Federal Savings Bank shareholders narrowly reelected incumbent board members, defeating activist investor Dream Chasers’ attempt to install two directors. Dream Chasers CEO Greg Lewis protested voting irregularities, accusing the board of extending voting deadlines and demanding greater transparency, including detailed voting records and disclosures about shareholder outreach. With a growing stake in the bank, Dream Chasers has signaled it will continue its push for governance reforms and alignment with shareholder interests.

Jana Partners Pushes Markel Group to Refocus on Core Insurance Business

Activist investor Jana Partners is urging Markel Group to improve its underperforming insurance operations and consider divesting its Ventures segment, which has deflated its valuation. Jana highlights Markel’s lagging returns compared to peers and argues that monetizing its non-core Ventures arm could unlock significant shareholder value. While not explicitly calling for a sale, Jana acknowledges Markel could be an attractive acquisition target for larger specialty insurers, emphasizing a need for strategic decisions to maximize long-term value.

Jana Partners Pressures Lamb Weston for Board Overhaul or Sale

Activist investor Jana Partners, with a 5% stake in Lamb Weston, is intensifying its push for changes at the frozen potato maker, following disappointing financial results and a CEO replacement. Jana has aligned with former executives, including ex-president Jeffery DeLapp, to challenge the current board, citing operational failures and declining shareholder value. The firm demands significant board changes or a sale of the company, reflecting escalating activist pressure on Lamb Weston to address its strategic and operational shortcomings.

Healthcare Realty Trust Adds New Directors in Starboard Value Agreement

Healthcare Realty Trust has appointed three independent directors—David Henry, Glenn Rufrano, and Don Wood—following a cooperation agreement with activist investor Starboard Value. The board also named Tom Bohjalian as Independent Chair, signaling a governance shift aimed at enhancing industry leadership. Latham & Watkins advised Healthcare Realty on the agreement, leveraging its expertise in shareholder activism defense and REIT industry strategies.

Pfizer Projects $1B IRA Impact, Maintains Stability Amid Activist Pressure

Pfizer forecasts steady 2025 revenues of $61-$64 billion, matching its 2024 outlook, despite a projected $1 billion revenue hit from Medicare Part D redesign under the Inflation Reduction Act. The company’s strategic focus on cost-cutting measures, including an additional $500 million in savings for 2025, and a pause on major acquisitions reflect its response to earlier shareholder activism demanding greater accountability and value creation. While growth for key products like Vyndaqel may slow due to competition, Pfizer's actions aim to stabilize performance and reassure investors of its long-term strategy.

Bluebell Capital to Shut Hedge Fund, Restructure Activist Strategy

European activist investor Bluebell Capital is closing its hedge fund, citing insufficient scale to cover administrative costs, but will continue its activist campaigns via co-investments and advisory mandates. Known for targeting high-profile companies like GSK, Richemont, and Danone, Bluebell has faced mixed success, including the ouster of Danone’s CEO but resistance to demands at BlackRock and Richemont. The firm, co-founded in 2019, plans to streamline operations while maintaining its focus on driving corporate change in Europe.

180 Degree Capital Faces Potential Proxy Battle with Marlton Partners

180 Degree Capital has responded to Marlton Partners’ press release and board nomination notice, disputing claims of inaccuracies and maintaining its focus on maximizing shareholder value. Activist investor Marlton Partners, citing dissatisfaction with the company’s direction, signals a potential proxy contest ahead, targeting governance changes at the micro-cap investment firm. CEO Kevin Rendino’s defensive stance suggests a contentious engagement, which could lead to significant corporate shifts and increased volatility for the $36.7M company.

Costco Defends DEI Initiatives Against Shareholder Activism

Costco has rejected activist shareholder proposals to scale back its diversity, equity, and inclusion (DEI) programs, emphasizing their alignment with the company’s ethics and long-term strategy. Activist investors raised concerns about potential legal and reputational risks, citing recent U.S. Supreme Court decisions and claims of reverse discrimination. Costco’s board reaffirmed its commitment, asserting the initiatives are legally compliant and essential for reflecting its diverse customer base and fostering innovation, setting a precedent for companies facing similar challenges.

GAM Pressures SBI Holdings Over Crypto Investment Strategy

Swiss asset manager GAM has taken an activist stance, urging Japan’s SBI Holdings to adopt a more transparent and proactive approach to its cryptocurrency investments. GAM criticized SBI’s handling of its $10 billion investment in Ripple Labs and XRP, claiming the lack of clarity and strategy significantly undervalues the company, which trades below its net asset value. In an open letter, GAM called for SBI to publish daily valuations of its XRP holdings, initiate an XRP buyback program, and provide a clear strategy for its blockchain and crypto assets to enhance shareholder value.

TopCon Explores Privatization Amid Private Equity Interest

Japanese eyecare products maker TopCon announced it is exploring privatization and other measures to enhance corporate value, following reports of acquisition bids from private equity firms KKR and EQT. Activist investor ValueAct Capital, holding a 13.69% stake in TopCon, has likely influenced the company’s decision amid Japan’s favorable dealmaking environment driven by governance reforms and shareholder activism.?

Barington Capital Pressures Macy’s to Create Real-Estate Unit

Activist investor Barington Capital has acquired a position in Macy’s and is pushing the retailer to create a separate real-estate division to boost its struggling stock. Partnering with Thor Equities, Barington disclosed its plan in a presentation to shareholders, arguing that leveraging Macy’s property assets could unlock significant value. The proposal highlights ongoing activist pressures for operational changes as Macy’s navigates a challenging retail environment.

Doosan Bobcat Unveils Shareholder Value Plans After Activist Pressure

Doosan Bobcat announced major shareholder value initiatives, including a 40% total shareholder return (TSR) ratio, quarterly dividend payments, and a 200 billion won ($139 million) share buyback, following its failed merger with Doosan Robotics. The move responds to activist investor Align Partners, which has a 1% stake and previously urged Doosan Bobcat to increase returns and sell non-core assets. The company also targets 12% annual revenue growth through 2030, signaling its commitment to enhancing corporate value via shareholder-focused strategies and business expansion.

Shareholder Activists Urge Microsoft to Invest in Bitcoin as Inflation Hedge

At Microsoft’s annual shareholder meeting, the Free Enterprise Project (FEP) presented a groundbreaking proposal urging the tech giant to consider adding Bitcoin to its balance sheet. Backed by Bitcoin advocate Michael Saylor, the proposal argues that Bitcoin offers superior inflation protection compared to corporate bonds, advocating for its adoption as a strategic asset. FEP emphasizes the move aligns with Microsoft’s fiduciary duty to safeguard shareholder value amid rising inflation and positions Bitcoin as a vital tool for preserving corporate assets.

Retail Shareholders Block Punit Goenka’s Reappointment to Zee’s Board

In a rare display of retail shareholder activism in India, small investors of Zee Entertainment overwhelmingly voted against Punit Goenka’s reappointment as a director, despite 52% institutional support. Retail investors, owning 41.6% of Zee, expressed dissatisfaction following the fallout of the $10 billion Zee-Sony merger, which led to a 54% decline in Zee’s share value this year. Governance experts note the decision highlights rising retail investor influence, though it may not immediately impact Goenka’s role as CEO, which is determined by the board.

MUST Asset Management Launches Activist Campaign Targeting Young Poong Corporation

MUST Asset Management has launched a public shareholder activism campaign against Young Poong Corporation, citing its undervaluation and lack of governance reforms. Holding over 2% of Young Poong’s shares, MUST has proposed measures such as retiring treasury shares, revaluing prime real estate, and improving shareholder returns to unlock value. Young Poong has agreed to meet with MUST in December to discuss these proposals, marking a critical opportunity for meaningful governance reforms.

Metage Capital Pressures HarbourVest to Address Share Price Discount or Face Liquidation

Activist investor Metage Capital is urging HarbourVest Global Private Equity (HVPE) to implement quarterly tender offers to narrow its 40% discount to net asset value (NAV) or consider liquidating its ￡3.4bn ($4.3bn) portfolio. In an open letter, Metage criticized HVPE’s underperformance compared to peers and called for reforms similar to its stablemate fund, which offers quarterly redemptions. Metage argues eliminating the discount could unlock ￡1.3bn in shareholder value, echoing demands from other activist investors for better governance and capital allocation strategies.

Trian Fund Increases Stake in Rentokil Initial Amid Push for Shareholder Value

US activist investor Trian Fund Management, led by Nelson Peltz, raised its stake in UK pest control company Rentokil Initial to 2.5%, investing ￡31 million in December. Trian recently secured a board seat for its head of research and has been engaging Rentokil on strategies to enhance shareholder value since first buying shares in June. The move underscores Trian’s continued focus on driving operational improvements and strengthening its influence within the company.

Bankwell Financial Director Lawrence Seidman Increases Stake to 14.99%

Bankwell Financial Group's board approved a measure allowing director Lawrence Seidman to raise his ownership stake from 9.9% to 14.99% of common stock. Seidman, who manages Seidman and Associates LLC and has served on the board since 2020, described the move as part of his long-term strategy to invest in undervalued community banks. The increased stake underscores Seidman’s confidence in the company’s growth potential.

December 2024: Shareholder Activism in Review

As the year comes to a close, December brought a mix of bold campaigns, strategic pivots, and governance shake-ups, wrapping up an eventful year in shareholder activism. From retail investors making waves in India to seasoned activists pushing global giants for transparency and transformation, this month was a fitting finale to 2024’s activism playbook. Here’s a snapshot of the key themes and trends shaping the last chapter of the year!

Maximizing Shareholder Returns

This month, campaigns focused on addressing undervaluation and enhancing returns for investors:

1. Doosan Bobcat responded to activist pressure with a bold value-creation plan, featuring a 40% TSR target, quarterly dividends, and a $139M share buyback initiative.
2. Metage Capital pushed HarbourVest to narrow its 40% NAV discount through quarterly tender offers or liquidation, advocating for better alignment with shareholder interests.
3. Jana Partners ramped up demands for change at Lamb Weston, citing disappointing financial results and advocating for board changes or a sale to unlock value.

Governance and Leadership Reforms

December saw significant campaigns targeting boardroom and leadership transformations:

• Alta Fox Capital targeted Daktronics for board overhaul, criticizing governance issues like nepotism and calling for fresh leadership.
• Browning West urged CAE to prioritize a collaborative approach in selecting a new CEO to address underperformance and strategic missteps.
• Dye & Durham underwent a board shake-up after Engine Capital’s successful campaign, leading to the appointment of new directors and interim CEO Hans T. Gieskes.

Reshaping Business Strategies

Activists pushed companies to reassess their strategies and capitalize on emerging opportunities:

• MUST Asset Management launched a public campaign against Young Poong Corporation, proposing governance reforms, treasury share retirement, and revaluation of prime real estate.
• GAM pressured SBI Holdings to adopt a clearer strategy for its cryptocurrency investments, emphasizing the need for transparency and a proactive approach to unlock shareholder value.
• Barington Capital urged Macy’s to create a real-estate division to leverage its property assets, arguing this move could substantially boost its struggling stock.

Global Trends in Activism

Activism continued to expand internationally, with notable campaigns shaping the landscape:

• TopCon, under pressure from private equity interest and activist investor ValueAct Capital, announced it was exploring privatization amid Japan’s shareholder-friendly reforms.
• Zee Entertainment saw a rare instance of retail shareholder activism in India, as small investors blocked Punit Goenka’s reappointment, signaling growing influence among non-institutional shareholders.
• Rentokil Initial saw Trian Fund Management increase its stake, signaling sustained engagement on operational improvements and shareholder value creation.

Emerging Activist Themes

• Diversity in Campaigns: From crypto investment strategies (GAM/SBI Holdings) to asset monetization in real estate (Barington/Macy’s), campaigns reflected a wide range of activist priorities.
• Retail Investor Influence: Zee Entertainment highlighted how retail investors are beginning to challenge traditional governance norms, particularly in emerging markets.
• Increased Focus on Transparency: Proposals like MUST’s push for clarity on Young Poong’s treasury shares and GAM’s demand for real-time XRP valuations at SBI underscored growing calls for corporate openness.

As 2024 wraps up, these campaigns set the stage for a dynamic and transformative year ahead in shareholder activism.

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