Shareholders in Leaf Group have criticized the digital media company for issuing an $800,000, off-cycle stock bonus to chief executive Sean Moriarty. They also said they were “shocked” that Moriarty had been granted a $200,000 cash bonus in June, weeks after the company received a $7.1 million Paycheck Protection Program loan.
Get Our Activist Investing Case Study!
Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!
Q2 2020 hedge fund letters, conferences and more
The investor group includes Osmium Partners, PEAK6 Investments, Boyle Capital, Oak Management, Generation Partners, and Spectrum Equity. Claiming the company’s stock is deeply undervalued due to what they describe as a “Moriarty Discount,” the activists have called for the CEO’s dismissal.
As of July 1, Blue Mountain Credit Alternatives Fund has returned 66% of capital back to investors as it continues the wind-down it started in October 2019. In their first-half letter to investors, which was reviewed by ValueWalk, fund management said due to the current market environment, they don’t expect significant distributions during the third Read More
The campaign has helped spark a rebound in the stock price, which is up nearly 40% year to date. In its defense, Leaf’s board said several of the investors were “intimately involved” with the business over the past years and approved many of the aspects they now criticize.
You can hear PEAK6 principal Rachel Saunders discuss the investor group’s approach on The Activist Insight Podcast.
What We’ll Be Watching For This Week
- What will happen at Optiva’s annual meeting today after it called on its shareholders to approve its poison pill?
- Will last Friday’s 13F deadline have birthed any new campaigns?
- How will Ring Energy react to Simon Kukes nominating 12 candidates to the board in an effort to “improve the quality” of the c-suite?
Lighthaven Capital Management’s Energous Corp Short Thesis
At the Contrarian Investor Conference last week, Lighthaven Capital Management presented a short thesis at Energous Corp (NASDAQ:WATT), claiming that the company’s wireless technology is too complex to work. Lighthaven’s Eric Chung said Energous Corp’s wireless charging technology was “off-trajectory,”and is struggling to deal with waves being blocked or devices being moved. The short seller noted the issues surrounding wireless charging have been looked into by major phone manufacturers, including Sony, Apple, and Samsung, but interest waned after it proved difficult to make the technology work correctly.
Chung admitted that the stock had already come down significantly since Apple apparently passed on acquiring the company in 2017 but said that while Energous Corp had staged a mini-rebound after taking steps to cut costs, the survival of the company rested on the success or failure of its wireless charging technology.
Chart Of The Week
The number of Japan-based companies publicly subjected to M&A-related activist demands between January 01 and August 14, in respective years.