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Call it a fast food fight. In the span of three days, activist investor Engaged Capital heated up the broiler at Danny Meyer’s Shake Shack after leaking to the Wall Street Journal that they were planning a proxy contest, and then quickly put the fight on the back burner and settled with the company to add an independent director. Engaged Capital’s short-lived campaign is another example of what the Journal’s Lauren Thomas describes as “activists laying down their arms” and looking to avoid expensive proxy contests. In this case, Shake Shack accepted one board member as opposed to the proposed three and mutually agreed to add another director with restaurant operations experience.
On Monday, Elliott Management went back to the well and for the second time pushed for changes at Houston-based power company NRG Energy. The feeling of déjà vu is strong at NRG Energy after Elliott’s 2017 campaign to “cut costs” and “review strategic initiatives” resulted in the appointment of two new board members. This time, the activist is again calling for cost cutting, a strategic review of recently acquired security systems company Vivint, and five new board members.
Meanwhile, the troubles continue to mount for octogenarian corporate raider Carl Icahn. Opening up to FT’s Antoine Gara and Ortenca Aliaj one week after disclosing the U.S. Attorney for the Southern District is investigating his company, Icahn Enterprises LP (IEP), for governance and accounting issues, the cranky alter kaker revealed he has lost over $9 billion in the past six years on misguided bets on a wide-scale stock market collapse, and that IEP has lost money every year since 2014 as a result. While he’s not shy about telling other companies how to operate, he admitted that, “maybe I made the mistake of not adhering to my own advice in recent years.”
Finally, death, taxes and 13-F filings. The most recent 13-Fs revealed Bill Ackman’s Pershing Square and Dan Loeb’s Third Point have major stakes in Alphabet. Barron’s Eric Savitz points to the company’s founders 51% voting control and notes, “this does not seem like a company under siege by activists. More likely it’s two smart investors that saw a clear buying opportunity and pounced.” The timing is noteworthy as Alphabet has been cutting costs in response to investor sentiment, something Loeb argued the company should be doing more of in his Q1 investor letter.
Have a great weekend,
GPP Team
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