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DEF14 Monthly Knowledge+: December's Activism Highlights (New 13D campaigns)

Explore the world of shareholder activism with DEF14's Monthly Knowledge+. Get a concise overview of the latest activism developments in November: discover the strategies, acquisitions, and targets pursued by prominent activists like Engine Capital and Saba Capital Management. From board reshaping to global activism, get insights into the dynamic landscape of corporate change driven by activist investors.

Greetings and happy new year, everyone! As we usher in the year 2024 and pledge to keep delivering the most recent updates on shareholder activism, we are gathered here today to provide you with a summary of December 2023. 

In the past month, we witnessed a total of 67 ongoing 13D campaigns, with 5 of them being brand new initiatives. Now, let's look into the details of these new campaigns and get a glimpse of what unfolded last month.

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.

HG Vora Capital Management’s December 13D Campaign: Penn Entertainment Inc.

HG Vora Capital Management, a prominent investment firm, known for its active involvement in various industries, has made significant moves in its relationship with PENN Entertainment, Inc., a renowned casino operator. HG Vora Capital Management has recently acquired 14,500,000 shares of PENN Entertainment's Common Stock, constituting 9.6% of the company's outstanding shares. This strategic maneuver reflects HG Vora's belief that PENN's Common Stock is substantially undervalued, and they are committed to enhancing shareholder value through their actions.

Furthermore, under the leadership of Parag Vora, a former Goldman Sachs banker, HG Vora Capital Management has officially submitted a request to exercise its right to nominate directors to PENN Entertainment's board. With an economic interest of 18.5%, which includes various swaps in PENN Entertainment, HG Vora is actively engaged in discussions with the company's leadership to explore initiatives aimed at strengthening shareholder value. 

Coliseum Capital Management’s December 13D Campaign: Gildan Activewear

Coliseum Capital Management, LLC, an investment firm, and its affiliated entities have recently acquired 9,881,461 Common Shares of Gildan Activewear, a manufacturer of everyday basic apparel, as part of their investment growth strategy. A Support Agreement has been established with Gildan, appointing Mr. Shackelton to the board of directors for the upcoming annual general meetings in 2024 and 2025, with the primary objective of enhancing shareholder value. Coliseum also intends to make further investments in Gildan, underlining their strong confidence in Gildan's leadership, strategic vision, and potential for substantial shareholder value creation. The newsletter of this agreement can be found here

180 Degree Capital Corp.’s December 13D Campaign: Synchronoss Technologies

Investment firm 180 Degree Capital Corp., alongside its affiliated individuals Kevin Rendino and Daniel Wolfe, has strategically submitted Amendment No. 2 to Schedule 13D as part of their investment strategy. This filing underscores their acquisition of 851,257 shares of Common Stock in Synchronoss Technologies, a prominent provider of personal cloud software and services, at a total cost of $12,991,120.

In parallel, Synchronoss Technologies has named Kevin Rendino, Chairman and CEO of 180 Degree Capital Corp., to its board of directors. Rendino's vast financial experience spanning three decades, coupled with his expertise in capital markets, value investing, and corporate governance, perfectly complements Synchronoss' shift towards a cloud-centric business strategy. His appointment is anticipated to significantly contribute to the company's pursuit of sustainable and profitable growth within the cloud sector.

Engaged Capital’s December 13D Campaign: Nevro Corp.

Engaged Capital, an activist investment firm led by Glenn W. Welling and affiliated entities, has made significant strategic moves by acquiring 2,168,163 shares, a notable 6% stake in Nevro Corp., a specialized company in spinal cord stimulation. This substantial investment, totaling approximately $39.7 million, is driven by Engaged Capital's dedication to unlocking shareholder value through active participation in the company's decision-making processes. According to Bloomberg, Engaged Capital's latest action is prompted by concerns surrounding Nevro's potential diversification into acquisitions that could impact its core operations. As both parties embark on this investment journey, they aim to collaborate closely, explore growth avenues, and maintain focus on Nevro's core priorities. 

Saba Capital Management’s December 13D Campaign: MainStay CBRE Global Infrastructure Megatrends Term Fund

The activist investment firm Saba Capital Management, along with Saba Capital Management GP, LLC, and Mr. Boaz R. Weinstein, has disclosed their acquisition of 5,298,775 shares from MainStay CBRE Global Infrastructure Megatrends Term Fund, an investment fund focusing on infrastructure investments. Their investment rationale revolves around recognizing the undervalued nature of the Common Shares as an appealing investment opportunity. In light of this, Saba Capital Management intends to engage with the Issuer's management and Board of Trustees to explore strategies for optimizing shareholder value. These discussions may encompass various aspects, such as the Issuer's business, governance, performance, capitalization, trading conditions, and potential liquidation. Furthermore, Saba Capital Management reserves the option to undertake additional actions, including proxy solicitations and nominations for the Board, as part of their investment strategy.

Other Activism Highlights worldwide

Twilio enlists Qatalyst Partners to defend against activist investors

Twilio, the cloud software developer, has enlisted Qatalyst Partners, the investment bank founded by Frank Quattrone, to provide advisory support in response to a group of activist investors. Qatalyst, which previously advised Twilio during its acquisition of Segment in 2020, has been working on this activist matter for several months, focusing on defense. Legion Partners, an activist firm that took a stake in Twilio this year, has been pushing for changes in the company's board and strategy. Twilio shares have seen ups and downs, with the activist groups suggesting divesting an underperforming unit. While Qatalyst is known for its M&A practice, it's presently engaged in activist defense and not pursuing a company sale, according to sources familiar with the matter.

Activist investor Cevian Capital takes $1.3 Billion stake in UBS, backs long-term strategy

Cevian Capital AB, a renowned Swedish activist investor, has revealed a $1.3 billion stake in UBS Group AG, adopting a friendly approach thus far. The Stockholm-based fund intends to be an engaged, long-term shareholder and is optimistic about UBS's strategy after its acquisition of Credit Suisse, aiming to create the world's largest wealth manager. While Cevian has supported UBS's integration strategy, the firm is well-known for its assertive campaigns in the past, such as pushing for improved stock returns at ABB Ltd. and advocating for higher payouts from Aviva Plc. Cevian's stake puts pressure on UBS CEO Sergio Ermotti and Chairman Colm Kelleher to deliver on the potential of this major banking sector merger. The activist investor expects UBS's valuation to be on par with or even surpass Morgan Stanley's on the price-to-tangible-book metric.

Crown Castle CEO to retire amidst activist pressure, Telecom veteran appointed as interim CEO

Crown Castle Inc., a communications infrastructure provider, is experiencing a significant leadership change as CEO Jay Brown plans to retire on January 16, 2024. This decision comes amid pressure from activist investor Elliott Management, which has been advocating for leadership changes and strategic improvements at the company. Following Elliott's campaign, the Crown Castle Board has appointed Anthony Melone, a seasoned telecom executive, as interim CEO, with a search underway for a permanent successor. Elliott had been pushing for enhanced governance, strategic adjustments, and potential changes in the company's fiber business. As Crown Castle navigates this leadership transition, the industry awaits further developments to shape its future direction.

Meta and Mark Zuckerberg seek dismissal of shareholder lawsuit questioning corporate governance

Attorneys representing Meta and its CEO, Mark Zuckerberg, have requested the dismissal of a shareholder lawsuit that raises unconventional allegations regarding the responsibilities of corporate leaders. Shareholder James McRitchie argues that Meta's directors have violated their duties to the company by prioritizing profits over broader societal and economic interests, impacting Meta shareholders who have investments in other companies. McRitchie's legal team advocates for the recognition of a "portfolio theory" of corporate governance, asserting that corporate decisions should consider external factors. They contend that Meta's focus on profits while downplaying the adverse effects of its products on society can harm the investment portfolios of Meta shareholders. Meta's defense argues that McRitchie's claims contradict long-standing Delaware corporate law, emphasizing that directors have no obligation to consider or protect a stockholder's investments in other firms under Delaware law. The case is expected to reach Delaware's Supreme Court regardless of the Vice Chancellor's decision.

JANA Partners calls on Frontier Communications to review strategic alternatives for enhanced shareholder value

​​JANA Partners, an investment firm known for its shareholder activism, has urged telecommunications company Frontier Communications Parent, Inc. to conduct a comprehensive review of strategic alternatives to enhance shareholder value. Frontier faces criticism from JANA regarding its underperforming stock price and its failure to attract new investors, leading to the suggestion of exploring options such as a sale transaction and divesting non-core assets. The firm emphasizes the need for immediate action to address these issues and unlock value for shareholders.

British asset managers urge Samsung C&T for governance reform and enhanced shareholder value

British asset management firms are urging Samsung C&T, a KOSPI-listed company, to enhance shareholder value and governance structure. Palliser Capital, holding a 0.62% stake in Samsung C&T, proposed the conversion of Samsung Group's complex structure into a holding company arrangement to improve efficiency and merge investment companies into a single holding entity. While this has boosted Samsung C&T's stock price, analysts doubt the feasibility of the proposals, considering the small stake held by most activist shareholders. Despite calls for reform, Samsung C&T had earlier pledged to retire 3 trillion won worth of treasury stocks over the next five years, suggesting the owner family's confidence in consolidating control without forming a holding company. Another UK firm, City of London Investment Management (CLIM), also presented dividend and buyback proposals. Samsung C&T will review these proposals after finalizing its 2023 business performance.

POSCO Holdings faces criticism over lack of transparency in CEO selection

POSCO Holdings Inc., the parent company of South Korea's largest steelmaker, POSCO, is facing criticism for its lack of transparency in the selection of a new leader. The state-run National Pension Service (NPS), the largest shareholder of POSCO Holdings with a 6.71% stake, is concerned that the current selection process may favor the incumbent Chairman Choi Jeong-woo. NPS Chairman and CEO Kim Tae-hyun called for a fair and transparent process, emphasizing that it is in the best interest of POSCO's shareholders to have the right person for the job. Kim also raised concerns about the CEO candidate recommendation committee, where six of the seven members were appointed by Chairman Choi, potentially favoring his reappointment. POSCO recently announced the abolition of its preferential screening system for reappointing the incumbent chairman but will need to take stronger measures to address transparency issues, according to Kim.

December Activism: Key Takeaways 

From the shareholder activism events in December 2023, several key takeaways emerged. Investment firms like HG Vora Capital Management, Coliseum Capital Management, and 180 Degree Capital Corp. demonstrated their commitment to unlocking shareholder value through strategic moves, such as acquiring stakes and nominating directors. 

Engaged Capital's actions highlighted the importance of aligning with a company's core priorities. Saba Capital Management's interest in undervalued shares emphasized opportunities for optimizing shareholder value. 

The Twilio case underscored the growing influence of activist investors in shaping corporate strategies. Cevian Capital's investment in UBS showcased the potential for friendly activism. Crown Castle's CEO retirement signaled the impact of activist pressure on leadership changes. Meta's lawsuit illustrated evolving perspectives on corporate governance, and JANA Partners' call for strategic alternatives at Frontier Communications emphasized the need for immediate action to address underperformance and unlock value. Finally, transparency and fairness in CEO selection processes, as seen in POSCO Holdings, remain crucial for shareholder trust and confidence.

Until Next Month:

We appreciate your presence today and look forward to reconnecting with you next month. As we embark on the new year, we're excited to share a comprehensive 2023 activism wrap-up report in the near future, so stay engaged with us!

As always, here's a friendly hint:

If you're keen to explore the realm of activism more deeply, make sure not to overlook real-time campaign updates provided by Activist Alpha® – your premier destination for priceless insights. Don't hesitate; subscribe today to unlock this invaluable resource!


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