Economics

The Top 10 Wildest Activist Campaigns In 2018

While there’s been no shortage of action this week, it seems an apt time to go tabloid and roll out our top 10 wildest activist campaigns of the year so far. What follows is the first half of our top 10 – submit your suggestions for a chance to influence the order of the remaining five.

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Q2 hedge fund letters, conference, scoops etc

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Top 5/10 Wildest Activist Campaigns

10. Ironwood Pharmaceuticals - Carl Icahn's former healthcare analyst Alex Denner gave everyone following this nearly $3 billion drugmaker a cardiac event when he announced plans to nominate himself to the board in early April. Within three weeks, the company announced that it would split into two companies, an announcement it followed with an aggressive solicitation on behalf of its board. It needn't have bothered; Denner's Sarissa Capital Management never filed a definitive proxy statement, didn't meet with Institutional Shareholder Services, and left it until the day of the annual meeting to disclose its support for the plan. Last month, Denner told an investment conference in New York that the company could improve its capital allocation. Too little, too late?

9. The subject of August's campaign in focus in Activist Insight Monthly, Wheeler Real Estate Investment Trust is a small REIT with a big problem. It has four activists in its stock, two with board representation, one - Stilwell Value - that wants to force its way onto the board and is accusing the others of allowing inappropriate spending on the former CEOs pet projects, and another - JCP Investment Management - in its preferred stock that claims Wheeler is in breach of its obligations and should pay a liquidation preference that looks certain to bankrupt the company. Unenviable, to say the least.

8. Families, eh? When Canadian e-payments company Glance Technologies fired its chief operating officer, Penny Green, she responded by requisitioning a meeting to oust the husband and wife team of CEO and chief technology officer, Desmond and Angela Griffin. Never mind that Angela is Green's sister; the two sides spent months trading increasingly vicious allegations about each other's business records, while denying that the proxy fight was a family feud. (Would it surprise you that cryptocurrency was mentioned more than once during the fight?). Moreover, all three directors continued to serve on the board. In June, shareholders backed the Griffins, leaving Green to say she would be “watching the board and management very closely” and would keep them “on a short leash.”

7. Turns out that Papa John International is a marketing company that happens to make pizzas, and it has two important marketing strategies it has tried with various levels of success. First, that preferred by founder and former CEO John Schnatter: criticizing the operations of its main advertising outlet, the NFL, to the point where both sides "mutually agree" to abandon a promotion with three years left to run and engulfing the fast food brand in racial controversy. Second, leading the board is an outright revolt against "Papa John" Schnatter, introducing a poison pill to stop him buying the company outright or forming a coalition with other shareholders to oust the board, and letting the business go down the toilet. Admittedly, the strategies have overlapped, so it’s difficult to perform a scientific analysis of which one institutional shareholders should endorse.

6. How do you come to an agreement with an ex-CEO you've accused of "clandestine collusion" and "frivolous and costly litigation," as well as transferring company property to a friend for no consideration. For that matter, how do you settle with a company you've accused of a "rancorous campaign of frivolous lawsuits, entrenchment tactics, and wasteful spending." The news stories on Activist Insight Online about Joseph Payne's nearly four-month battle with Arcturus Therapeutics is the best place to start.


Quote of the week comes from Carl Icahn, who argues that a deal between Cigna and Express Scripts he opposes would be terrible “for the economy at large,” and, amazingly, quoted a letter from BlackRock CEO Larry Fink that argued the private sector might have to step up to solve social problems. Cigna has cited his small stake in its stock and short position in Express Scripts as grounds for skepticism, while saying his arguments about change in the healthcare industry are “naïve at best.” This quote, from an earlier Icahn letter, explains why the activist would get involved so late in the game, with just three weeks until the special meeting where shareholders will vote on the deal:

“When Cigna entered into this agreement several months ago I believed a $60 billion purchase price made no sense, but there were at least arguments that could be made by management to try to persuade us into thinking that it was not completely ridiculous. These arguments now disappear in light of certain material events of the last month, such as Amazon’s almost certain entrance as a competitor to Express Scripts and the government’s direct challenge to the highly flawed rebate system.”

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