Another day, another slew of activist news. On Monday Carl Icahn upped the ante in his eBay play. The activist investor fired off a detailed open letter to shareholders urging them to support his non-binding proposal to separate PayPal into a separate independent company. Icahn also questions the company’s corporate governance practices and lambastes chief executive John Donahoe and directors Marc Andreeseen and Scott Cook.
“The complete disregard for accountability at eBay is the most blatant we have ever seen,” states Icahn, whose moves are widely followed despite the fact that he no longer manages money for outside clients. “For the first time in our long history, we have encountered a situation where we believe we should not even have to run a proxy fight to change the board composition. Rather, we believe that in any sane business environment these directors would simply resign immediately from the eBay board, either out of pure decency or sheer embarrassment at the public exposure of the extent of their self-serving activities.”
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Also on Monday, Omega Advisors’ Leon Cooperman disclosed that he owns 7.6 percent of Chimera Investment Corp., a REIT that invests in residential mortgage loans, real estate-related securities and other asset classes. In a fresh 13D filing, Cooperman says he has acquired the shares for investment purposes. However, he adds that he has spoken with members of the board of directors about the company’s operations, business, strategies and strategic direction. “These discussions have reviewed, and may continue to review, options for enhancing shareholder value through various strategic alternatives, improving the issuer’s operational and financial execution, and general corporate matters,” the filing states.
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Jeffrey Smith’sStarboard Value L.P.is further turning up the heat on Darden Restaurants. The New York activist hedge fund, which has repeatedly opposed the restaurant company’s plans to spin off the Red Lobster unit, told other Darden shareholders it is seeking their approval to call a special meeting. If successful, it plans to ask shareholders to vote on a non-binding resolution at the meeting calling on the board not to approve any agreement or proposed transaction involving a spinoff of Red Lobster’s business prior to the 2014 annual meeting unless the transaction would require shareholder approval. Smith also urges the board not to act on a deal and instead evaluate all value creation opportunities.
The activist also says if the company ignores the shareholder vote it may nominate a majority slate of director candidates and try to replace the entire board. Starboard’s strategy to seek a special meeting to vote on the Red Lobster deal is somewhat surprising given that consent solicitations are traditionally used by activists to replace directors, not to vote on a company decision. Earlier this month, the hedge fund manager sent a letter to the restaurant company's chairman and CEO, Clarence Otis, and the board of directors warning if the company moves forward with its spinoff plan before the annual meeting, he is prepared “to take all steps necessary to hold the board accountable for its actions,” including nominating a majority slate of director candidates and seeking the support of shareholders to replace a majority of the board at the 2014 annual meeting. He said discussions with other shareholders found similar concerns regarding the plan and their desire for the company to undertake “a more fulsome review of all available opportunities” to create value.
Starboard, one of the busiest activist hedge funds these days, last week nominated three people to the board of directors of Wausau Paper for its upcoming annual meeting. They include Smith, who is the managing member, chief executive officer and chief investment officer of Starboard Value LP Corp. The hedge fund owns 15.2 percent of the paper and tissue company.
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The Men’s Wearhouse, meanwhile, raised its hostile tender offer for Jos. A. Bank Clothiers to $63.50 per share from $57.50 per share. In response, Ricky Sandler’s New York–based hedge fund firm, Eminence Capital, which owns 4.9 percent of Jos. A. Bank Clothiers, issued a statement publicly supporting the improved offer. “We have maintained all along that the combination of these two great companies is the best outcome for all shareholders,” he states in a press release. “We believe this offer clearly represents a superior alternative for Jos. A. Bank shareholders compared to remaining independent and acquiring Eddie Bauer,” referring to Jos. A. Bank’s recent takeover offer designed to thwart Men’s Wearhouse’s takeover bid.
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Credit Suisse lowered its estimates and cut its price target for popular activist target Oil States International, from $116 to $105. It also maintained its Neutral rating on the stock, noting that management recently stated that revenues would drop between 5 percent and 10 percent in 2014. Back in July the oil field services company announced plans to spin off its Accommodations business into a standalone, publicly traded C-Corporation and to subsequently consider whether to convert the Accommodations business into a real estate investment trust. It is taking some time to complete this somewhat complicated process, which concerns Credit Suisse. “There is a great deal of work to be done and this is a slight negative headwind to the stock,” it tells clients in a note on Monday. At least three major activist investors hold significant positions in the stock — Greenlight Capital, Atlantic Investment Management and Jana Partners.
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At least two investment banks raised their price target on hedge fund favorite Priceline.com. Deutsche Bank lifted its target from $1240 to $1425, noting that the travel website recently reported gross profit and cash flows that were above its estimates for the fourth quarter. “The company continues to execute near-flawlessly,” the investment bank tells clients in a recent note, adding that key international bookings growth has reaccelerated. “We continue to view PCLN as one of the best ways to play global online travel,” it adds. Meanwhile, UBS now sees the stock moving to $1480, up from its previous target of $1300. “Priceline remains a core holding in our universe as investors in the Internet space will continue to rotate towards large-cap, secular growth names,” UBS tells clients in a new note.
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Kenneth Griffin and his Citadel GP LLC disclosed in a regulatory filing they jointly own 812,339 shares, or 5.4 percent, of Veeva Systems, a provider of cloud-based software for the global life sciences industry. At year-end, Citadel owned about 240,000 shares, as well as puts and calls on the stock, according to a separate regulatory filing.