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DEF14 Monthly Knowledge+: May ‘24 Activism Highlights


Explore the significant surge in shareholder activism in May. Discover the strategic investments and proxy battles driving change in companies like Nuveen, Ellsworth, Vestis, and more. Stay updated with Activist Alpha® for real-time insights.

It's been nearly a year since we launched our monthly digest. If you've been following along since the start, we hope you've found it valuable. And for those just joining us, welcome! Let's kick things off by delving into the world of shareholder activism in May, where we've noticed a significant increase in activity. We went from 46 active campaigns in April to a whopping 62 last month. Among these, three new initiatives are making their debut under the 13D banner. As usual, we'll take the time to delve into each of them before wrapping up with an overview of global campaigns. Without further delay, let's get started! 


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 May Activism Campaign 


(I): Nuveen Arizona Quality Municipal Income Fund

  • Alongside its associated entities, Saba Capital Management, announced the acquisition of 598,308 common shares in the Nuveen Arizona Quality Municipal Income Fund. This represents 5.16% of the outstanding shares and was made for investment purposes. The total acquisition amounted to approximately $6,237,733.

(II):Ellsworth Growth and Income Fund Ltd. 

  • Saba Capital Management, L.P. acquired 730,857 common shares of Ellsworth Growth & Income Fund Ltd, representing 5.32% of the outstanding shares. The acquisition amounted to approximately $5,839,547.


Corvex Management LP’s May Campaign 

  • Corvex Management LP, along with its associated entities, announced the acquisition of 16,591,833 common shares of Vestis Corporation, representing 12.6% of the outstanding shares. The total purchase amounted to approximately $206,917,449. Vestis Corp, operating within the wholesale sector, has recently undergone a name change from Epic NewCo, Inc., and is incorporated in Delaware. The substantial position taken by Corvex may influence Vestis Corp's future strategies and growth. Corvex accelerated purchases post-decline, betting on the company's recovery and improved communication under its experienced board, including ex-Cintas executives. Corvex’s long-term investment aims to enhance Vestis's market value through strategic board involvement and better capital allocation, positioning it closer to industry leader Cintas.


Other Activism Highlights Worldwide in May

Activist Investor Eminence Capital Pressures Reckitt Amid Legal Woes

Eminence Capital has acquired at least 0.5% of Reckitt's stock, adding pressure on the consumer goods group already struggling due to potential liabilities from infant formula litigation. Reckitt, known for brands like Clearasil, Lysol, and Durex, has seen its shares fall about 15% this year following a $60 million jury verdict linking its formula to a premature infant's death. Analysts estimate total liabilities could range from £400 million to £8 billion. The presence of Eminence, which advocates for operational improvements and possibly selling the baby formula division, is expected to increase calls for strategic changes. Other activist investors are also reportedly showing interest in the company.


Elliott Management Acquires $2.5 Billion Stake in Texas Instruments, Urges Financial Discipline

Activist investor Elliott Management has taken a $2.5 billion stake in Dallas-based semiconductor giant Texas Instruments (TI), criticizing the company for lagging stock market returns and excessive spending. Elliott, which now owns about 1.3% of TI's market value, contends that the company is overspending on capital projects and deviating from its commitment to driving growth in free cash flow per share. TI, known for its handheld calculators and prominent semiconductor manufacturing, announced a $30 billion complex in Sherman, Texas, to centralize production, raising concerns from Elliott about over-investment relative to product demand. Elliott's letter emphasizes the need for TI to refocus on a dynamic strategy to enhance shareholder value.


In response, TI CEO Haviv Ilan signaled a willingness for "constructive dialogue" with Elliott, referencing new financial metrics that align with the hedge fund’s proposals. Ilan suggested TI could surpass Elliott's proposed free cash flow target of $9 per share by 2026, projecting $12 per share in 2026 and $13.30 by 2027. Elliott's critique focused on TI’s significant capital expenditures on chip fabrication plants, which reduced free cash flow per share from $6.40 in 2022 to $1.47 in 2023. Ilan indicated that future capital allocation would be revenue-dependent, potentially ranging from 0% to 10%, emphasizing that the company’s focus on analog semiconductors, which constituted 74% of its $13 billion revenue in 2023, remains central to its strategy.


Norfolk Southern's CEO Survives Activist Investor Challenge, but Board Sees Changes

Shareholders of Norfolk Southern voted down an attempt by activist investment firm Ancora to remove the company's CEO and take control of its board. However, Ancora secured three seats on the 13-member board, aiming to cut costs and boost profits. Norfolk Southern faced criticism for its safety record and financial performance, particularly after a hazardous train derailment in East Palestine, Ohio. CEO Alan Shaw expressed readiness to work with the new directors. Ancora, holding a 0.16% stake, advocates for precision scheduled railroading to improve efficiency. Norfolk Southern's stock fell 2.5% following the vote.


Endeavor’s $13 Billion Deal Highlights Minority Shareholder Pushback

Endeavor Group's decision to go private in a $13 billion deal led by Silver Lake, which holds 71% of Endeavor’s voting stock, has sparked controversy due to the exclusion of minority shareholders from voting. This move, aimed at preventing minority shareholders from vetoing the deal, highlights a growing trend where controlling investors bypass minority approval to avoid lowering valuations and accelerating sales. Despite the legal risks, companies like Weber and Agiliti have recently followed similar strategies. Endeavor's independent board failed to secure minority shareholder voting rights, leading to potential lawsuits and criticisms of undermining corporate governance safeguards.


Crown Castle Retains Board Amid Co-Founder’s Challenge

Crown Castle successfully retained its entire slate of 12 board nominees, fending off a challenge from co-founder and former CEO Ted Miller at the 2024 annual stockholders meeting. Despite Miller's efforts to secure four board seats, including for himself and his son-in-law, shareholders backed Crown Castle's current board members, citing their strategic and operational expertise. The company, led by new CEO Steven Moskowitz, is focused on improving performance through a strategic review of its fiber and small cell business. Miller had criticized the board for underperformance and proposed using digital twin and AI technology to enhance efficiency. Crown Castle's victory underscores investor confidence in its current leadership and ongoing initiatives to unlock shareholder value.


Activist Investor Urges Rio Tinto to Unify Corporate Structure in Australia

Activist investor Palliser Capital has called on Rio Tinto to abandon its primary London listing and unify its corporate structure in Australia, mirroring a move by rival BHP. Palliser argues that Rio’s dual-listed structure creates strategic barriers and a $27 billion valuation gap between its London and Australian entities. Consolidating the primary listing in Sydney would simplify governance and enhance Rio’s acquisition capabilities. Palliser, which holds less than 1% of Rio’s shares, believes this change could unlock significant shareholder value, projecting a 40% upside in Rio’s shares. Despite the push, Rio's CEO Jakob Stausholm has previously downplayed the possibility of such a move, emphasizing the current structure's benefits for the global business.


CalPERS Withdraws Support for ExxonMobil's Board Amid Legal Battle with Activist Investors

ExxonMobil’s ongoing legal battle with environmentally focused activist investors, Arjuna Capital and Follow This, has led the California Public Employees’ Retirement System (CalPERS) to withdraw support for all 12 of Exxon’s director nominees, including CEO Darren Woods. CalPERS, managing $484 billion and holding a $1 billion stake in Exxon, criticized the company’s lawsuit against the activists, who had proposed reducing emissions. Despite the activists withdrawing their proposal, Exxon continued its lawsuit, prompting CalPERS to urge other shareholders to oppose Exxon’s nominees, warning that the lawsuit threatens shareholder activism. Exxon defended its actions, stating it seeks clarity on the proposal process and emphasizing the board's role in creating shareholder value.


Elliott Management Acquires Stake in Sensata Technologies, Advocates for Strategic Changes

Activist investor Elliott Management has taken a significant stake in Sensata Technologies, an industrial technology company valued at $6.38 billion. Sensata develops and manufactures sensors and electrical protection components through its Performance Sensing and Sensing Solutions segments, primarily serving the automotive, heavy vehicle, industrial, and aerospace industries. Elliott, now the company’s largest investor with an estimated $600 million to $1 billion position, criticized Sensata for poor capital allocation under former CEO Jeff Cote, who recently resigned. Elliott's involvement has already led to the appointment of interim CEO Martha Sullivan and board member Phillip Eyler. The firm aims to improve Sensata’s capital allocation, divest non-core businesses, and capitalize on the growing demand for sensors in hybrid vehicles. Elliott believes these changes could unlock substantial shareholder value, given Sensata’s current underperformance compared to peers and the broader market.


Elliott Investment Management Acquires $1 Billion Stake in Johnson Controls

Activist investor Elliott Investment Management has built a significant position in Johnson Controls International Plc, worth over $1 billion, making it one of the company’s top 10 investors. Johnson Controls, a leading player in HVAC control crucial for cooling data centers, has underperformed peers like Carrier Global and Lennox International, whose stocks have appreciated more than 50% in the past year compared to Johnson Controls’ 9.2% rise. This comes as the company, led by CEO George Oliver, faces executive turnover and explores asset sales worth about $5 billion, including heating and ventilation assets and the ADT alarms unit. Johnson Controls reaffirmed its full-year earnings forecast of $3.60 to $3.75 per share after a cut in January. Shares rose 4.4% in premarket trading following news of Elliott’s stake.


Carbon Streaming Corporation Overhauls Leadership Amid Strategic Expansion

Carbon Streaming Corporation has revamped its leadership, appointing former Equinox Gold CEO Christian Milau as interim CEO and Olivier Garret as Chair of the Board, following the resignations of Justin Cochrane and Maurice Swan. This leadership change, driven by discussions with key shareholders including Marin Katusa, aims to enhance governance and operational efficiency. The company also acquired Blue Dot Carbon Corp. for $2.5 million in shares to strengthen its carbon finance portfolio. The stock surged 135% in early trading, reflecting investor optimism. New board member Marcel de Groot, along with Milau and Garret, will focus on improving cash flows, strategic asset management, and aligning with global climate goals.


Activist Investor Nelson Peltz Sells His Disney Stake After Boardroom Battle

Nearly two months after losing a costly bid to join Disney's board, billionaire Nelson Peltz has sold his stake in the entertainment giant. Peltz, head of Trian Fund Management, controlled about $3.5 billion in Disney stock, mostly owned by former Marvel chairman Ike Perlmutter. Despite Peltz's criticisms of Disney's management and strategic direction, shareholders strongly supported the existing board in April. Peltz's activist campaign, which cost Trian $25 million, pressured Disney to announce significant cost reductions, boosting its stock. Peltz sold his shares at $120 each, higher than the current price of about $101, reflecting a 15% rise in the past year.


Penn Entertainment Shares Soar After Activist Investor Suggests Sale

Penn Entertainment shares surged over 18% on Friday after activist investor Donerail Group recommended the company explore a sale. Donerail's Managing Partner Will Wyatt criticized Penn’s board for poor capital allocation and a misguided strategy, particularly highlighting the costly acquisition and subsequent sale of Barstool Sports. Wyatt also condemned CEO Jay Snowden’s “excessive compensation” amid poor performance. He argued Penn’s stock is undervalued, suggesting its casino assets alone could be worth more than double the current market capitalization, estimating a potential sale value between $5.9 billion and $6.9 billion. 


Activist Investor to Vote Against THG Chair Amid Stagnant Share Price

Activist investor Kelso, which holds about 0.5% of UK ecommerce company THG, announced it will vote against the reappointment of chair Charles Allen due to dissatisfaction with the company's lack of progress in reviving its share price. THG, known for its sites like Lookfantastic and technology for online retailers, has seen its shares plummet 90% since its 2020 IPO, despite being valued at £5.4 billion at the time. Kelso criticized THG for not spinning off divisions or moving its listing to the premium segment of the London market, asserting that the poor share price cannot be blamed solely on the London Stock Exchange. THG CEO Matthew Moulding has cited broader investor wariness and negative media coverage as factors. Despite recruiting Allen in 2022 to enhance corporate governance and strategy, Kelso believes the company's divisions are worth more than its current market capitalization of £1 billion. 


Vivek Ramaswamy Acquires Activist Stake in BuzzFeed

Entrepreneur and former GOP presidential candidate Vivek Ramaswamy has acquired a significant stake in BuzzFeed, holding shares and call options worth nearly $4 million, or about 7.7% of the company. Ramaswamy, who recently endorsed Donald Trump, believes BuzzFeed is undervalued and aims to engage with its board to explore strategic changes to maximize shareholder value. BuzzFeed, led by CEO Jonah Peretti, has been focusing on AI-driven content and recently sold Complex for $109 million while laying off 16% of its workforce. A spokesperson for BuzzFeed stated the company is open to shareholder ideas.


U.S. House Committee Investigates Union Pensions Over Shareholder Activism

The U.S. House Education & Workforce Committee, led by Chairwoman Virginia Foxx (R-N.C.), has initiated an investigation into union pension plans and their shareholder activism. Letters were sent to Teamsters President Sean O’Brien, AFL-CIO President Elizabeth Shuler, and SEIU President Mary Kay Henry, requesting detailed information on how unions influence shareholder meetings, the financial impact on pension plan investments, and related expenses. The unions, asked to respond by June 12th, have been accused of using shareholder proposals to advance political goals, including ESG-related policies. The investigation follows concerns over union-led taxpayer-funded pension bailouts, aiming to ensure transparency and protect workers and taxpayers from potential mismanagement.


May Activism: Key Takeaways 

In May, shareholder activism surged with 62 campaigns, highlighting its growing influence. Saba Capital invested in Nuveen and Ellsworth funds, and Corvex took a substantial stake in Vestis Corporation. Eminence pressured Reckitt, and Elliott called for financial discipline at Texas Instruments. Norfolk Southern's board saw changes, and Crown Castle retained its board. Palliser pushed for Rio Tinto's structural unification, and CalPERS withdrew support for Exxon's board over environmental issues. Leadership changes at Carbon Streaming, Peltz's exit from Disney, Penn Entertainment's surge after a sale suggestion, and a U.S. House investigation into union pension activism underscored the activists' impact on corporate strategies and governance.


Until Next Time

Now we wrap up our look at shareholder activism in May: it’s clear that investor engagement continues to be a powerful force in the corporate world. From strategic investments and proxy battles to demands for better governance and accountability, these actions are reshaping companies and driving meaningful change. To stay updated on the latest in shareholder activism and gain real-time insights into ongoing campaigns, consider subscribing to Activist Alpha®.

Thank you for joining us, and we look forward to bringing you more insights next month! 👋

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