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DEF14 Monthly Knowledge+: April ‘24 Activism Highlights


 Stay updated on the latest in shareholder activism with our April '24 DEF14 Monthly Knowledge+.

Hello everyone! As spring begins to bloom, welcome to our latest update on shareholder activism activities. Today, as tradition, we're diving into the events of April, where we've observed 46 active campaigns, with 6 new initiatives launching under the 13D banner. Let's get into a thorough analysis of these recent movements now.


DEF14's Activist Alpha® provides real-time updates on the performance and positions of active campaigns filed by renowned activist groups.

DEF14's Activist Alpha® provides real-time updates on the performance and positions of active campaigns filed by renowned activist groups.


Saba Capital Management’s April Campaign 

In April 2024, Saba Capital Management actively pursued its strategy of closed-end fund arbitrage by initiating four new Schedule 13D filings. 


(I): First Trust Speciality Finance & Financial Opportunities Fund

Saba Capital Management, alongside its associated entities, announced their acquisition of common shares in First Trust Specialty Finance & Financial Opportunities Fund for investment purposes, investing a total of approximately $2,636,903. 


(II): Invesco Municipal Trust

This Schedule 13D indicates an investment amount of approximately $26,379,296. The purchase reflects their assessment that these shares are currently undervalued and present a lucrative investment opportunity. 


(III): Invesco Trust for Investment Grande Municipals

Saba filed a Schedule 13D announcing the purchase of common shares in Invesco Trust for Investment Grade Municipals, detailing an investment of approximately $26,363,056. 


(IIII): Nuveen Nissouri Quality Municipal Income Fund

This Schedule 13D disclosed saba’s acquisition of common shares in the Nuveen Missouri Quality Municipal Income Fund for approximately $1,255,011. 


GAMCO Investors’ April Campaign 

Gamco, led by Mario J. Gabelli, has invested approximately $27.4 million in Carrols Restaurant Group, Inc., reflecting a strategic investment philosophy in securities analysis and enhancement of shareholder values.


Gamco does not seek to control the Issuer or its management but maintains the flexibility to suggest or implement changes that could lead to strategic sales or mergers, restructurings, or other major corporate actions.


(I):  Carrols Restaurant Group

Gamco and its associated entities acquired a total of 2,906,381 shares of Carrols Restaurant Group, Inc., which represents 5.29% of the company's outstanding shares. 


Impactive Capital’s April Campaign 

Impactive Capital LP invested approximately $261,558,850 to purchase shares of Marriott Vacations Worldwide Corporation, as disclosed in their Schedule 13D filing. In the SEC filing, Impactive Capital described Marriott Vacations (VAC) as an appealing investment option.


(I):  Marriott Vacations Worldwide corp

Impactive Capital LP disclosed its ongoing and future engagement strategy with various stakeholders of Marriott Vacations Worldwide Corporation. This includes regular discussions with the company’s management and board members, other shareholders, industry experts, potential strategic partners or competitors, and additional relevant parties. The topics of these conversations range from the company's operational strategies and financial management to its board and leadership structure, as well as environmental, social, and governance (ESG) practices. Impactive Capital also intends to explore strategic alternatives, potential directions, and improvements in capital deployment and corporate structure.


Other Activism Highlights Worldwide in April


Disney Triumphs in High-Stakes Boardroom Battle Against Activist Investor Nelson Peltz

Disney has successfully defeated a challenge from activist investor Nelson Peltz in a decisive proxy battle, securing the re-election of all 12 board nominees led by CEO Bob Iger. This victory came despite significant support from Trian Partners, backed by a $3.5 billion stake and additional shares from former Marvel executive Ike Perlmutter. Only about 31% of shareholders supported Peltz’s bid for a board seat. Large institutional investors like Vanguard and BlackRock, as well as a strong majority of retail shareholders, sided with Disney. The contentious battle, which saw Disney and its challengers spending millions on campaign-like efforts, ended with Disney focusing on growth, value creation, and creative excellence. Despite the proxy fight, Disney plans to continue its strategic initiatives, including cost cuts, increased dividends, and share buybacks, aiming to boost shareholder value and address its longstanding issues with executive succession.


Battle for Control of Norfolk Southern Heats Up as Activist Investors Gain Support

As the May 9 shareholder vote approaches, the fight over Norfolk Southern’s future intensifies. CEO Alan Shaw is steadfastly defending his long-term strategy for the railroad, promising to continue his focus on safety and resource management despite a recent push by activist investors led by Ancora Holdings. Ancora, advocating for a significant overhaul, has nominated seven new directors and proposes replacing the current management, arguing that changes are crucial for enhancing operational efficiency and aligning the company’s profits with industry standards. The activist group has secured endorsements from key proxy advisory firm Glass Lewis, major customer Cleveland-Cliffs, and two large labor unions, suggesting a compelling need for change. In contrast, Shaw maintains that most workers, investors, and customers still support his vision, which includes recent executive hires aimed at operational improvements. The battle has sparked controversy, particularly regarding union endorsements, which Shaw criticizes as potentially compromising shareholder value through backroom deals. Both sides remain open to negotiation, but with starkly different views on the path forward for Norfolk Southern.


Woodside Energy Faces Shareholder Rejection Over Climate Strategy

In a significant setback, Woodside Energy, Australia's largest gas producer, saw its climate transition plan rejected by 58% of shareholder votes, signaling a shift in investor sentiment and increasing scrutiny over its environmental strategies. Despite the plan's failure, Woodside's Chairman survived an ousting attempt, albeit with a significantly reduced margin of approval compared to previous years. This comes after an intense activist campaign highlighting the company's lackluster approach to reducing carbon emissions and its continued investment in fossil fuel projects. The campaign, supported by major international pension funds and proxy advisor Glass Lewis, reflects a growing push from shareholders for more robust and clear-cut environmental actions. Woodside has committed to achieving net-zero emissions by 2050 for its direct and indirect operations but faces criticism for its reliance on carbon credits and ongoing large-scale oil and gas developments. The company's leadership, recognizing the discontent among investors, has vowed to continue dialogues and refine its strategies amidst the complex challenges of the energy transition.


Jana Partners Urges Strategic Review at Wolfspeed Amid Performance Concerns

Activist investor Jana Partners is pushing for a comprehensive review of strategic alternatives at Wolfspeed, a leader in silicon carbide technologies for energy-efficient solutions. Despite Wolfspeed's strong market position and a growing demand in sectors like electric vehicles and renewable energy, the company has faced challenges with its expansion and manufacturing capacity, particularly with the delays in its new facilities in North Carolina and New York. These issues have contributed to Wolfspeed's stock underperformance, with shares significantly dropping from their previous highs. Jana, which has a history of advocating for operational improvements and strategic reviews in its investments, suggests that Wolfspeed prioritize its existing facility expansions, improve return on capital, set realistic operational targets, and ensure that future expansions do not require dilutive capital raises. The firm also hints that while a sale of the company at a premium is unlikely given the current stock price, better execution and strategic investments could enhance shareholder value significantly.


Delaware Judge Dismisses Shareholder Lawsuit Against Meta, Upholding Traditional Corporate Loyalties

A Delaware judge has dismissed a shareholder lawsuit against Meta Platforms, asserting that the company's directors should prioritize societal and economic interests alongside shareholder profits. The lawsuit, spearheaded by corporate governance activist James McRitchie, claimed that Meta's focus on profit maximization negatively impacts the broader society and the economic environment, affecting shareholders with diverse investment portfolios. However, Vice Chancellor J. Travis Laster, citing extensive legal precedents and literature in a detailed 101-page opinion, reaffirmed that under Delaware law, directors owe their duties primarily to the corporation's stockholders. The court rejected the "portfolio theory" proposed by McRitchie's attorneys, which suggested that corporate governance should consider external factors like social media's societal impacts. The dismissal underscores the traditional view that corporate leaders must act in the best interests of their shareholders, focusing on maximizing share value, despite broader implications attributed to Meta's platforms, such as mental health issues and misinformation.


Twilio Seeks Shareholder Approval for New Board Director Terms

Cloud communications company Twilio has announced plans to seek shareholder approval for changes to its board director terms, shifting from three-year to one-year terms. If approved, directors elected at the 2025 annual meeting and beyond will serve one-year terms, according to Twilio's statement. Additionally, board member Byron Deeter will not seek reelection and will retire prior to the 2024 annual meeting, reducing the board back to nine directors. Twilio's board recently expanded to ten members with the addition of Sachem Head partner Andy Stafman. The company's move comes amidst pressure from activist investors, such as Legion Partners and Anson Funds, urging Twilio to explore strategic alternatives, including divesting certain business segments or selling the entire company.


Activist Investor Calls for Separation of Chairman and CEO Roles at BlackRock Amid ESG Concerns

UK activist investor Bluebell Capital Partners proposes a binding resolution to BlackRock, advocating for the separation of chairman and CEO roles amidst concerns over governance and sustainable investing practices. Bluebell argues against CEO Larry Fink holding the chairman position, citing a conflict of interest and the need for independent board oversight. Alleged instances of ESG contradictions by BlackRock are highlighted as evidence of greenwashing and board accountability issues. Bluebell previously called for Fink's resignation over perceived ESG hypocrisy. The activist also criticizes BlackRock's oversized board with 17 members. The resolution is set for vote at BlackRock's annual general meeting on May 15. In response, BlackRock urges shareholders to reject the proposal, defending its leadership structure as appropriate and industry-standard. BlackRock counters Bluebell's critique, attributing it to disagreements over proxy voting decisions. Emphasizing the importance of tailored leadership structures, BlackRock suggests a one-size-fits-all approach may not be suitable. Larry Fink has faced prior scrutiny over ESG matters, with former BlackRock sustainable investment chief Tariq Fancy advocating for his resignation, accusing him of sidestepping criticism of the company's ESG stance.


Kao Corp. Shares Surge as Oasis Management Calls for Enhanced Global Strategy

Shares of Kao Corp., a Japanese cosmetics and household products-maker, experienced a notable increase, closing 5.1% higher at 6,099 yen ($40.21), following a call to action from Hong Kong-based activist investor Oasis Management. Oasis urged the Japanese cosmetics and skincare giant to maximize its international market presence and better compete with global leaders like L'Oreal and Procter & Gamble. The investor criticized Kao's current efforts in marketing and distribution as insufficient for unleashing the full potential of its prestigious brands such as Curél and Molton Brown. In response, Kao acknowledged its ongoing investments in brand growth and structural reforms, maintaining an open dialogue with Oasis and expressing openness to new ideas from all shareholders. This interaction underscores a significant moment for Kao as it navigates increasing pressures to optimize its brand strategy on the global stage.


Shell Urges Shareholders to Reject Climate Target Resolution

Shell has urged its shareholders to vote against an independent resolution, co-filed by a group of 27 investors, which demands tighter climate targets from the energy company. The resolution, led by activist shareholder Follow This and backed by investors managing around $4 trillion, calls for aligning Shell's medium-term carbon reduction targets with the Paris Climate Agreement. Shell argues that the resolution is against good governance and shareholders' interests, warning of negative consequences for customers. The move follows Shell's recent retreat on carbon reduction targets, citing strong gas demand and energy transition uncertainty. However, Follow This founder Mark van Baal criticized Shell's rejection, accusing the company of disregarding climate commitments. Amidst rising shares, Shell's own resolution on its energy transition strategy will be voted on at the upcoming annual general meeting.


Ariel Investments Pressures Paramount for Transparency Amidst Board Changes and Merger Talks

Ariel Investments, holding a 1.8% stake in Paramount Global, is demanding increased transparency regarding recent board changes and ongoing merger discussions with Skydance Media. The firm expressed concerns over exclusive talks with David Ellison, arguing that bypassing competitive bidding would undermine fair market value. Moreover, Ariel criticized Paramount's announcement of four board members' departure following the upcoming annual meeting without providing context in its proxy filing. Co-CEOs John Rogers Jr. and Mellody Hobson called for explanations on governance changes and emphasized the importance of ensuring board independence. They urged Paramount to prioritize all shareholders' interests over those of controlling shareholder Shari Redstone. The lack of disclosures and speculation surrounding board governance and leadership, coupled with anticipation of dilution from rumored transactions, has led to a repricing of Paramount's stock. While Ariel remains invested in Paramount due to the company's underlying value, it advocates for a thorough evaluation of any potential merger deal to ensure long-term success for all stakeholders. The letter comes amidst ongoing merger negotiations between Skydance, Paramount, and Apollo Global Management, with investors expressing opposition to Skydance's bid. Paramount's shares have experienced fluctuations, reflecting uncertainties surrounding the merger and governance issues.


Activist Investor Urges Novavax Board Overhaul Amidst Alleged Marketing Failures

Hedge fund Shah Capital has issued a call for an "urgent shake-up" of Novavax's board, citing the company's purported failure to capitalize on safety concerns surrounding mRNA vaccines. In a letter obtained by MarketWatch, Shah Capital criticized Novavax's management for not leveraging these concerns to bolster sales of its own non-mRNA COVID-19 vaccine. The activist fund blamed Novavax's declining sales on management's marketing strategy and called for a revamp to target individuals hesitant about mRNA vaccines. Novavax defended its actions, expressing confidence in its long-term growth strategy and welcoming shareholder perspectives. Shah Capital accused Novavax of neglecting scientific papers highlighting potential risks associated with mRNA vaccines and criticized the company for adhering to "traditional and outdated" marketing approaches. The fund asserted that Novavax could tap into a market of approximately 100 million U.S. citizens averse to mRNA vaccines, particularly in Southern states and among individuals over 60. Novavax, which received U.S. approval for its COVID-19 vaccine in July 2022, has seen its share price decline by 55% over the past year, according to Shah Capital, attributing this decline to "timid leadership" and underperformance compared to rivals. The hedge fund highlighted Novavax's alleged failure to manage its relationship with the FDA and its lag in adopting new technologies, proposing the addition of tech industry leaders to the board to enhance technological utilization.


Gildan Taps Former Goldman Executive as Chair Amidst Shareholder Rebellion

To address shareholder unrest at Gildan Activewear Inc., the company has appointed former Goldman Sachs executive Tim Hodgson as its new board chair. Hodgson aims to redirect Gildan's focus towards enhancing shareholder value amidst internal turmoil. Despite being a key player in affordable T-shirt production and owning brands like American Apparel, Gildan faces a bitter dispute with major investors over leadership and strategy. Browning West LP, based in Los Angeles, advocates for significant board changes, including reinstating former CEO Glenn Chamandy, who was ousted in December due to strategic differences. While Gildan's recent board shakeup suggests potential change, Browning West remains committed to its proxy fight. Hodgson, drawing on his experience at Hydro One Ltd., emphasizes the importance of ending the ongoing turmoil and concentrating on core business operations. He supports Chamandy's termination, citing challenges in founder successions. Gildan has initiated a strategic review, possibly including a sale, with Goldman's assistance, but Hodgson prioritizes creating shareholder value above all else.


Activist Investor Pushes Dr. Martens Toward Strategic Review and Potential Sale

Marathon Partners Equity Management urges Dr. Martens to consider a strategic review and potential sale to maximize shareholder value, citing a nearly 83% drop in shares since the 2021 IPO. Managing member Mario Cibelli believes Dr. Martens could thrive as a private entity or under a larger holding company, leveraging its heritage. While praising CEO Kenny Wilson, Cibelli criticizes the company's IPO valuation and guidance. With Dr. Martens previously acquired by Permira, Cibelli flags potential conflicts of interest amid Golden Goose sale speculation. Dr. Martens confirms receipt of the letter but declines further comment. Despite challenges, the company aims to improve its performance, particularly in the Americas, after third-quarter revenue decline in January 2024.


April Activism: Key Takeaways 

In April, shareholder activism saw notable developments across various industries, reflecting diverse strategies and objectives. Saba Capital Management's focus on closed-end fund arbitrage underscores the importance of identifying undervalued assets, while GAMCO Investors' investment in Carrols Restaurant Group highlights the pursuit of strategic enhancements to drive shareholder value. Impactive Capital LP's sizable investment in Marriott Vacations Worldwide Corporation demonstrates the potential for engagement strategies to influence corporate decisions. 


Meanwhile, high-profile battles such as Disney's successful defense against Nelson Peltz's challenge and the intensifying struggle over Norfolk Southern's future illustrate the complexities of corporate governance and strategic direction. Notably, environmental concerns feature prominently, with Woodside Energy facing shareholder rejection over its climate strategy and Shell's resistance to tighter climate targets. These developments underscore the evolving landscape of shareholder activism, where investors leverage diverse tactics to shape corporate behavior and enhance shareholder returns.


Until Next Time

As we conclude our update on shareholder activism activities last month, we're reminded of the dynamic and impactful nature of investor engagement in shaping corporate landscapes. Whether it's through strategic investments, proxy battles, or calls for environmental accountability, shareholder activism continues to drive change and influence the trajectory of companies worldwide. If you're interested in staying informed about the latest developments in shareholder activism and accessing real-time insights into active campaigns, consider subscribing to Activist Alpha®. 


With its comprehensive coverage and analysis of activist initiatives, Activist Alpha® empowers investors, executives, researchers, and stakeholders with the knowledge needed to navigate this ever-evolving landscape effectively. 


Goodbye, and we look forward to seeing you soon next month!

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