This Week In Activism: Tempur Sealy, ROVI, MGM And More

This Week In Activism:  Tempur Sealy, ROVI, MGM And More

This Week In Activism: March 21st, Vol. 8 by Stock Pucker

This Week In Activism Vol. 8 below:


>> Land & Buildings has nominated 3 directors for the Associated Estates Realty (AEC) board. It owns right at 2.9% of AEC. L&B also recently waged a battle over at MGM. Something we just covered here, but it’s worth noting that MGM has rebutted L&B’s call to form a REIT and spinoff its casino operations.

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>> Marcato Capital called out Sotheby’s again in an interview last week, taking to task its “financial strategy.” Recall that Marcato founder Mick Mcguire put out a letter earlier this month calling for Sotheby’s to buy back $500mm in shares — here’s our chopped & screwed version of the letter and our more detailed analysis.

>> Corvex has noted that it wants an entirely new board installed at American Realty (ARCP). The founder and CEO that was in place when the accounting scandal took place is gone, but the entire board is still there. But Corvex’s thoughts are nothing new continues to iterate as such and hasn’t put forth any names — we covered Corvex-ARCP after the latest letter here. Corvex founder Keith Meister also personally wants a board seat. His fund owns 7.8% of the troubled REIT.

>> The Clinton Group has put out a fairly lengthy presentation on Campus Crest (CCG). Recall that it Clinton wants Campus Crest to buy a smaller private real estate company and let that management team take over at CCG — our more detailed analysis here.

>> Marcato Capital was also active at Bank of New York Mellon (BK) last week. The activist owns 1.6% of the bank but has put out a website with a 150-page presentation, Note that Nelson Peltz (owning 2.6% of BNY with a board seat) has come out against Marcato’s call to fire the BNY CEO.

>> Starboard sent a letter to Yahoo calling for various engineerings, including buybacks, cost cuts, a spinoff of Yahoo! Japan and monetization of its IP / real estate — here’s our chopped and screwed version of the letter and more detailed analysis.

>> Blue Clay Capital has nominated two directors for the Select Comfort (SCSS) board. Mattress companies can’t catch a break, recall that Tempur Sealy (TPX) is battling H Partner — more on TPX and H Partners here.

>> Engaged Capital sent a letter to Rovi (ROVI) taking task the company over management issues and nominating four candidates for the board — a closer look from our perspective here.

>> Orange Capital sent a letter to Pinnacle Entertainment (PNK) asking the casino operator to engage with Gaming & Leisure Properties over a real estate buyout, but does not the offer is too low. Recall that Orange wanted PNK to spin off its real estate into a REIT in 2014. Orange owns right under 5% of PNK with a $25 a share cost basis — the stock is right around $35 a share today.

>> Nelson Peltz’s Trian Partners puts out a short presentation on DuPont (DD). Again, Peltz owns 2.7% and wants two board seats at DD and two at the pending specialty chemicals spinoff. DD has rejected that offer.

>> Barington Capital sent another letter to Eastern Co. (EML). There’s been a lot of back and forth here, with several letters, and even Mario Gabelli and GAMCO has gotten involved. Owning 5.2% of the company, the fund wants the company to narrow its focus and work on corporate governance. Here was our condensed version of the last letter.

>> Guidance Software (GUID) put Max Carnecchia on its board, thanks to RGM Capital’s active stake. RGM owns 13.9% of GUID. Max and RGM were both involved in Accelrys in 2013. Shares are trading at $5.30, but RGM’s cost basis is around $7.70 a share.

>> Joseph Stilwell has sent a sweet and short letter to Harvard Illinois Bancorp (HARI) about its board nominee. Stilwell has been involved with the $11mm market cap bank since 2011. Shares are trading at just $11 a share, while Stilwell’s cost basis is right at $10 a share. Remember that Stilwell snapped a photo of the HARI board chair sleeping on the job at the annual shareholder meeting.

New campaigns

** Red Oak partners has gone active on Tecnoglass (TGLS), taking a 6.9% stake.

Ownership changes

++ Discovery Capital upped its Agilysys (AGYS) stake from 7.8% to 8.8%. The fund went active in September and owns just under 2mm shares at a $12 cost basis. The stock trades just under $10 a share.

++ DHR International has upped its stake in CTPartners (CTP) to 7.5% and nominated six directors for the board. The fund went active in February after a failed attempt to buy CTP for $7 a share. The stock now trades around $6.20, while DHR’s cost basis is $6.70 a share.

++ AVI Partners upped its stake in YuMe (YUME) to 9.1% and nominated two directors for the board. The fund went active in January with a 5.5% stake. Shares are trading just over $5.50 a share, while AVI’s cost basis is around $5.30.

Interesting activist reads around the web—

  • Taking sides on activist investors, WSJ
  • SEC chair wants activist fights to be nicer, BloombergView
  • Activist stocks: Shareholder activism goes mainstream, GM falls prey, ValueWalk
  • Dear Mr Activist – What Have You Wrought?, Cassandra Does Tokyo
  • If Only G.E. Had an Activist Investor Who Cared, DealBook
  • Sachem Head Capital Earns “Emerging Manager of the Year” Award, FINalternatives

Most read posts from stockpucker this week—

  • Comments On Nelson Peltz And DuPont ($DD), Featuring Jeff Ubben. The biggest risk for Trian right now is failing to find enough support for its proxy battle. And it appears that DuPont knows it has the upperhand.
  • American Realty Capital Properties ($ARCP): Playing Hardball With Corvex. Corvex has changed its tone on how to help ARCP, but there’s also Twin Capital that’s putting pressure on the board. The restatement of financials and new CEO didn’t lead to a huge jump in the stock and there’s limited catalysts going forward.
  • Nelson Peltz Fires Back At Mick And Marcato Over BNY Mellon ($BK). Last week Nelson Peltz came out and villainized Mick Mcguire and Marcato Capital’s call to fire the Bank of New York Mellon CEO.
  • Chopped & Screwed: Kerrisdale Capital Letter To Webster Financial ($WBS). We believe that Webster is now trading at an over $1 billion discount to its fair value[that’s over 20% undervalued]. We believe a spin-off is the most natural approach. HSA Bank is strong enough to stand on its own.

In case you missed our last activist update, here it is.

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