[ad_1]
Dayforce, Scholar Rock, and More Stocks See Action From Activist Investors
[ad_2]
Tag: activist investing
-
Longtime Cracker Barrel foe urges shareholders to vote against ‘worse than mediocre’ CEO after dismal earnings | Fortune
[ad_1]
Activist investor Sardar Biglari launched his eighth proxy battle at Cracker Barrel after the dining chain reported disappointing fourth-quarter earnings on Wednesday. In a filing on Thursday, Biglari, who is also the CEO of Steak n’ Shake, urged shareholders to vote against the re-election of Cracker Barrel CEO Julie Masino and railed against the chain’s management, which he deemed “worse than mediocre.”
Biglari’s latest campaign is part of a 14-year entanglement with Cracker Barrel in which he has repeatedly failed to get himself elected as a director. He has, however, managed to elect two candidates of his choosing (in 2022 and 2024), while fighting against his proxy battles has cost Cracker Barrel millions. Even this was cause for criticism from Biglari: “The Board has spent $31 million of shareholders’ money to prevent one of its largest shareholders [Biglari] from having a minority voice. Now the Company has become a laughingstock.”
For many years, Biglari was one of the company’s largest shareholders, at one point owning nearly 20% of Cracker Barrel’s shares. He has since sold off much of his stake, and disclosed ownership of a 2.9% stake in the proxy filing.
The restaurant chain’s fourth quarter earnings disclosed a miss on earnings per share, falling short on earnings per share while beating on revenue and projecting weaker customer traffic in the year ahead.
Cracker Barrel’s stock fell approximately 10% in after hours trading and was down more than 8% at time of publication.
Biglari, who is also the CEO of Biglari Holdings, which also controls Maxim magazine, isn’t going away. On Thursday, he urged shareholders to vote against the board’s directors, whom he accused of “severe destruction of shareholder value,” an inability to understand Cracker Barrel’s brand, and a failure to select a suitable CEO.
“Instead of demonstrating the discipline and stewardship required to protect and enhance a storied brand, management has relied on ill-conceived strategies that have worsened existing challenges rather than solved them, culminating in the disastrous “brand refresh” that has ranked among this century’s worst brand blunders alongside Bud Light and Jaguar,” he wrote. “CEO Julie Masino’s tenure has been marked by repeated and highly publicized missteps, from misguided rebranding efforts to ill-fated “transformation” initiatives, that reflect the Company’s troubling pattern of tone-deafness and disregard for shareholder capital.”
Biglari also took aim at the Cracker Barrel board’s marketing expert, Gilbert Dávila, whom he accused of being responsible for the chain’s struggles, and “eroding shareholder value” by approving “outsized pay packages” for Cracker Barrel executives.
“Shareholders can send a message that merit and performance, the foundation that built America, rank above DEI,” he continued.
Cracker Barrel has dismissed Biglari’s antics, previously telling Fortune that the activist investor has made “numerous false and misleading claims about Cracker Barrel, its Board and management.” Shareholders have rejected nearly all of his proposals.
In June, The Wall Street Journal reported that many Cracker Barrel customers were mourning the “loss of that old-timey feeling,” and the uproar escalated in August after a particular tweet by Donald Trump Jr., highlighting allegations that the rebrand was “woke.” The market reaction alone wiped out roughly $100 million from the chain’s value. At issue was, in part, the new logo that did away with the traditional “Uncle Herschel” mascot—a denim-clad old man perched on a chair beside a barrel.
The redesign, which was a key part of Cracker Barrel’s $700 million modernization campaign—and was intended to reverse an outflow of customers from the chain, performance that Biglari has criticized for years—immediately ignited controversy, drawing outrage from longtime diners, Biglari, and even President Trump. Biglari used his restaurant’s social media accounts to troll Cracker Barrel over the blunder.
Cracker Barrel quickly reversed course, ditching the rebranding and suspending its planned restaurant renovations. The company’s stock is down roughly 17% year-to-date.
Fortune Global Forum returns Oct. 26–27, 2025 in Riyadh. CEOs and global leaders will gather for a dynamic, invitation-only event shaping the future of business. Apply for an invitation.[ad_2]
Lily Mae Lazarus
Source link -
Norfolk Southern shareholders elect 3 directors nominated by activist, while CEO keeps job
[ad_1]
Norfolk Southern’s CEO will be under more pressure to improve profits after the railroad’s shareholders voted Thursday to elect three of the board members an activist investor nominated, but he won’t be fired right away.
Ancora Holdings had nominated seven directors as part of a bid to take control of the railroad’s 13-member board and overhaul its operations. The key support Ancora picked up from major investors, two major rail unions and proxy advisory firms wasn’t enough to persuade shareholders to elect Ancora’s entire slate.
Ancora’s Jim Chadwick blamed passive investors for failing to support the investors’ nominees. Chadwick promised to hold CEO Alan Shaw accountable and keep fighting to improve the railroad.
“For the passive investors. If anything should go wrong here and there’s another derailment and people die, this is on you,” Chadwick said. “You ignored the recommendation of the proxy advisors, the unions, the largest customer of the company. You gave us literally no support and we still won three board seats without you. What happens at Norfolk Southern now is on your firms and your conscience.”
The board members voted out included Chair Amy Miles.
Norfolk Southern’s stock price, which soared after Ancora announced its campaign to oust Shaw, immediately fell after the results of the vote were announced. It was trading down nearly 4% at $223.43 Thursday morning.
Shaw had argued that Ancora’s plan would cut the railroad too deep and jeopardize the improvements in safety and service Norfolk Southern has seen since its disastrous February 2023 derailment in East Palestine, Ohio.
Shaw’s plan calls for keeping more workers on hand during a downturn to make sure the railroad is prepared to handle the eventual rebound in shipments once the economy recovers and continuing to invest in safety improvements to prevent derailments. He received the backing of the rest of rail labor, several key regulators and a number of the railroad’s customers.
“Norfolk Southern has persevered through several challenges over the last year. We have met every challenge and never lost sight of where we are taking our powerful franchise,” Shaw said. “We are keeping our promises and delivering tangible results, and there is more to do.”
Ancora had argued that Norfolk Southern should implement the industry standard Precision Scheduled Railroading operating model that is designed to minimize the number of workers, locomotives and railcars a railroad needs.
The Precision Scheduled Railroad operating model relies on running fewer, longer trains on a tighter schedule and switching cars between trains less often to streamline operations. Shaw had argued that running the railroad too lean would jeopardize the improvements in safety and service Norfolk Southern has seen since its disastrous February 2023 derailment in East Palestine, Ohio.
Rail unions have said they believe Precision Scheduled Railroading has made the industry more dangerous and derailments more likely because inspections are so rushed and preventative maintenance may be neglected.
For now, Shaw and the Chief Operating Officer he just hired in March, John Orr, will have more time to prove their strategy will work. NS paid CPKC railroad $25 million to get permission to hire Orr. But if they don’t bring Norfolk Southern’s profit margins in line with the rest of the industry, their jobs could still be in jeopardy.
“Your CEO has missed earnings estimates for six quarters in a row and destroyed a town in our own state,” said Chadwick, whose firm is based in Ohio. “And if this underperformance continues, we will hold you accountable. But we will work with you for the mutual benefit of all stakeholders.”
Ancora wanted to hire former UPS Chief Operating Officer Jim Barber to be the railroad’s next CEO and former CSX railroad operating chief Jaimie Boychuk as the chief operating officer. Barber has said keeping more workers on hand during slower times is wasteful and compared it to UPS keeping all its seasonal workers it hires for the holiday season on the payroll year round.
The investors had projected their plan would cut more than $800 million in expenses in the first year and another $275 million by the end of three years. Ancora said say they didn’t plan layoffs, but wanted to use attrition to eliminate about 1,500 jobs over time.
Norfolk Southern has said it’s own plan to make the railroad more efficient would generate about $400 million in cost savings over two years and improve its profit margin. But analysts have said its profits might still lag behind the other major freight railroads because they are all working to get more efficient too.
[ad_2]
Josh Funk, The Associated Press
Source link -
Activist hedge fund Elliott bets $1 billion on British platinum producer
[ad_1]
Elliott Investment Management has built a roughly $1 billion stake in Anglo American Plc, the UK-listed miner that’s received an unsolicited takeover approach from Australia’s BHP Group Ltd.
The activist hedge fund led by Paul Singer has exposure to almost 33.6 million Anglo American shares via derivatives, according to a UK regulatory filing Friday that confirmed a report by Bloomberg News. The firm amassed the 2.5% holding over recent months, according to people familiar with the matter, who asked not to be identified discussing confidential information.
The investment puts Elliott among Anglo American’s 10 biggest shareholders, data compiled by Bloomberg show. Anglo American shares jumped as much as 6.3% in London after Bloomberg News reported the stake.
Elliott also has a 0.07% short position in BHP, a separate filing shows. Representatives for Elliott and Anglo American declined to comment.
Elliott’s presence in Anglo American’s stock emerges with the mining company the subject of takeover interest from BHP. The Australian miner has proposed an acquisition that values its smaller rival at £31.1 billion ($38.9 billion) and would create the world’s top copper producer. Bloomberg News reported BHP’s approach on Wednesday. Anglo American said the proposal significantly undervalues the company.
Singer’s firm is known for stepping in to beaten-down stocks and then pushing companies to take measures ranging from share buybacks to outright sales of the business.
“We like to see value-driven investors in the register,” said Giuseppe Bivona, chief investment officer at another activist, Bluebell Capital Partners, which built a stake in Anglo American in February. The company “is surely worth much more than BHP is offering.”
Anglo American has long been viewed as a potential target among the largest miners, particularly because it owns attractive South American copper operations at a time when most of the industry is eager to add reserves and production.
But suitors have been put off by its complicated structure and mix of other commodities, as well as its deep exposure to South Africa. In February, Anglo American reported a steep drop in profit and lowered its dividend on the back of falling demand for diamonds and platinum group metals — commodities that are unique to its portfolio.
BHP has proposed an all-share deal in which Anglo would first spin off controlling stakes in South African platinum and iron ore companies to its shareholders.
Shares in Anglo American closed 3.2% higher in London on Friday at 2,643.00 pence, giving it a market value of about £32.4 billion. The stock surged 16% Thursday after BHP’s approach. Even after this week’s rally, the stock is still down more than a third from its peak two years ago.
Elliott took a sizable position in BHP in 2017 and pushed it to spin off certain oil assets. In 2021, the miner struck deals that extended its withdrawal from fossil fuels, including a sale of oil and gas operations to Woodside Petroleum Ltd.
Singer’s firm has been involved with other metals companies as well. In 2022 Elliott held talks with Kinross Gold Corp. that resulted in the miner announcing a $300 million share buyback. And it’s the majority shareholder in Triple Flag Precious Metals Corp., which provides financing for mining companies. It’s also setting up a new venture, Hyperion, to invest in mining assets.
Subscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up for free.[ad_2]
Crystal Tse, Dinesh Nair, Swetha Gopinath, Bloomberg
Source link -
Hertz’s electric vehicle and CEO about-face is the latest twist after a COVID bankruptcy filing and a deep relationship with Carl Icahn
[ad_1]
It seemed like a good idea at the time. Now we know better.
Hertz, reeling from a bankruptcy and the pandemic, announced plans to buy 100,000 Teslas in late 2021. The splashy move certainly helped Elon Musk’s electric-vehicle maker, which saw its market cap surge past $1 trillion for the first time.
Hertz enjoyed a bump in its market value as well, and the car-rental giant hired NFL star Tom Brady to show off its new fleet of Teslas.
“How do we democratize access to electric vehicles? That’s a very important part of our strategy,” interim CEO Mark Fields said at the time. “Tesla is the only manufacturer that can produce EVs at scale.”
But Hertz paid close to list prices for the Teslas, rather than demanding a large discount as car-rental giants often do. That decision would come back to bite it.
Last year, Musk’s EV maker cut prices across its lineup to boost sales. That not only angered individual customers who’d recently bought a Tesla at a higher price, but it also crushed the resale value of Hertz’s used EVs.
‘Elevated costs’ of EVs
This January, the rental giant revealed that it was selling off 20,000 electric vehicles, noting the costly depreciation, weak demand, and pricey repairs. It took a $245 million hit and suffered its steepest quarterly loss since the pandemic.
“The elevated costs associated with EVs persisted,” Hertz CEO Stephen Scherr said at the time. “Efforts to wrestle it down proved to be more challenging.”
This week, Hertz announced that Scherr would be replaced by Gil West, the former COO of General Motors’ Cruise robotaxi unit. While Scherr took over after the Tesla deal, under his leadership Hertz continued its focus on EVs, placing big orders for them with GM and Polestar.
The ill-fated EV push followed a difficult stretch for Hertz that culminated in billionaire activist investor Carl Icahn unloading his substantial stake in the car-rental company in 2020 days after its bankruptcy. In 2014, Icahn had begun acquiring his stake in Hertz, which was struggling. He called Hertz “a great brand” that he hoped would “return to its former glory,” and three of his allies soon had board seats, while the hunt for a new CEO began.
After selling selling his stake, Icahn said, “Yesterday I sold my equity position at a significant loss, but this does not mean that I don’t continue to have faith in the future of Hertz.”
The following year, the company announced the decision to buy Teslas. Now it’s about to welcome yet another new CEO, again tasked with turning things around.
Subscribe to the Eye on AI newsletter to stay abreast of how AI is shaping the future of business. Sign up for free.[ad_2]
Steve Mollman
Source link -
Bill Ackman divulged details about the time a fellow activist tried to force him to liquidate—only to be saved by a ‘handshake’ deal with Jamie Dimon’s bank
[ad_1]
Elliott Investment Management targeted Pershing Square Holdings in 2017, when Paul Singer’s firm privately tried to force fellow activist Bill Ackman to liquidate his listed company.
Ackman disclosed the details of the battle around the fund publicly for the first time during a three-hour interview on the Lex Fridman Podcast. The billionaire posted the discussion on X, the social media site formerly known as Twitter, on Tuesday.
Elliott took a big position in Pershing Square Holdings, a closed-end vehicle that traded at a discount to the value of its assets, while shorting the underlying securities held in the fund, Ackman said. It was a bet that the target would be forced to liquidate, allowing investors to profit from the shakeup.
“I envisioned an end where the permanent capital vehicle ends up getting liquidated and another activist in my industry puts me out of business,” Ackman said.
Ackman managed to fend off Elliott by snapping up shares in his own company, effectively buying control, he said. He borrowed $300 million from JPMorgan Chase & Co., to help him to do this.
“I give JPMorgan enormous credit in seeing through it,” Ackman said. “It’s a handshake bank and they bet I’d succeed.”
A representative for Elliott declined to comment.
Activist campaigns in the market for closed-end funds have picked up in recent years. Firms including Boaz Weinstein’s Saba Capital Management have pounced on historical dislocations in these funds’ pricing and have urged asset managers to take steps like buying back shares or liquidating assets to boost valuations.
Pershing Square Holdings is listed on European stock exchanges with $14 billion plus total assets and returned 27% in 2023. While its net asset value discount has narrowed from 2020’s record level, it is still hovering around 27%.
Earlier this month, Ackman said he plans to start a new fund with a similar structure called Pershing Square USA for retail investors.
Subscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up for free.[ad_2]
Yiqin Shen, Bloomberg
Source link -
‘No hormones, ever,’ Shake Shack says about its chicken. Activist shareholders say that’s true for every other chicken sold in the U.S., too
[ad_1]
“No hormones, ever” is what Shake Shack said about the crispy fried chicken in its sandwiches. A shareholder group says that’s a paltry claim, because literally no restaurant chain in the country uses hormones in its chicken.
The company’s corporate communications and marketing are heavy on the claims. A 2023 letter from CEO Randy Garutti in its Stand For Something Good Report said the Shake Shack culinary team in 2023 focused on improving the food lineup with “hormone- and antibiotic-free proteins.” It touts its poultry – and bacon – as having no hormones, although the company notes with an asterisk that federal regulations prohibit the use of hormones or steroids in chicken and pork.
Now, the company is facing a potential shareholder proposal asking it to show exactly how its chicken is hormone free or to provide an explanation and to publish a risk analysis of making those statements. The shareholder activist, The Accountability Board, said the claims are “difficult to understand.” The group focuses on stewardship and transparency, according to its website, and its portfolio includes investments in other fast food businesses including Jack in the Box, McDonald’s and The Wendy’s Company.
Shake Shack this week asked the Securities and Exchange Commission to leave the proposal off its 2024 proxy statement without facing repercussions from the regulator. According to Shake Shack, it has already begun altering its wording to say, “no added hormones.”
Josh Balk, chief executive officer of the Accountability Board, isn’t satisfied with that change. “Shake Shack can’t make harmful and false claims for years and quietly sweep them under the rug when caught,” he said in an email to Bloomberg. “And especially so by simply replacing one misleading claim for another.”
A Shake Shack spokesperson acknowledged the change to “no added hormones” and added, “We are also not making any changes to our chicken suppliers or any of our supply chain and food policies — it is simply a language change.”
Shake Shack isn’t alone in facing down shareholders who are disenchanted with animal welfare issues.
Activist investor Carl Icahn famously took on McDonald’s for years over the fast food giant’s treatment of pigs. Icahn in his fight sought the help of other large investors but ultimately lost a proxy fight in 2022.
McDonald’s pledged to avoid the use of gestation crates for pregnant pigs entirely by 2024.
Subscribe to the new Fortune CEO Weekly Europe newsletter to get corner office insights on the biggest business stories in Europe. Sign up for free.[ad_2]
Amanda Gerut
Source link