Hyperactive Activist Investors

Plus: The Washington Commanders lose again, and it’s not even football season ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

April 11, 2023

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TOGETHER WITH

Good morning.

We’ve all been there: your flight has been delayed or canceled, throwing your travel plans into utter disarray. Now you need to call home or attend that meeting via Zoom but, oy vey, your phone has about 3% battery left. Well, there’s a bank of charging stations over there on the wall by Gate B13!

Sweet relief! Right? Well, hold on there, chief. The Federal Bureau of Investigation warns that you should think twice before using free charging stations in airports and other travel hubs. Why? “Bad actors have figured out ways to use public USB ports to introduce malware and monitoring software onto devices,” the agency informed us by way of a Monday tweet. The FBI calls it “juice jacking” but you can just call it another reason to hate flying.

Morning Brief

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Could 2023 be the year of the activist?

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Washington commands the Commanders.

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Tupperware ain’t so fresh.

Corporate News

Activist Investors Engaged in a Record Amount of Campaigns Last Quarter

Everybody’s a critic.

This past quarter was the busiest on record for activist investors with 83 campaigns launched globally, the Financial Times reported. With companies facing major post-pandemic profit headwinds, activist investors are in overdrive.

The Times They are a-Changin’

More than 50% of 2023’s activist activity has taken place in Europe and Asia. In South Korea, one of the most active activist investors is Changhwan Lee’s Align Partners, which launched eight campaigns last quarter. Align gained plenty of attention recently when it successfully took on SM Entertainment. Using a 1% stake, Lee convinced the K-pop powerhouse to drop its contract with music producer Like Planning — a firm owned by SM Entertainment’s founder — claiming that the ties between the two companies have been “damaging shareholder value.”

Surprisingly, the US has seen a 30% dip year-over-year in activist activity, but that’s largely because brash and brazen American investors are plying their wares abroad. For example, Paul Singer and his hedge fund Elliot Management have submitted proposals to provide financing for the Manchester United football club, creating more competition for British billionaire Jim Ratcliffe and Qatari royal Sheikh Jassim bin Hamad Al Thani, both of whom want to buy the team outright.

The other reason for the remarkable inactivity stateside is that some of the most high-profile moments for US activist investors have just fizzled out:

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Salesforce activist investors, including Singer (this guy is everywhere), were circling the cloud-based software company but backed off once the company announced 8,000 job cuts and delivered revenue numbers that beat Wall Street’s predictions. Nelson Peltz of Trian Partners scrapped plans for a Disney proxy war after a recently-returning Bob Iger gave Peltz what he’d been agitating for: $5.5 billion worth of cost savings and 7,000 pink slips.

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Though not as immediately serious as full-blown activist campaigns, shareholders filed more than 540 resolutions in the US this quarter, urging public companies to address environmental, social, and governance issues, according to Proxy Preview. Even with activist investors pushing hard, ESG resolutions have proven resilient. NPR reported that last year, shareholders withdrew a record 110 proposals that were focused on climate change after they struck deals with companies.

I Didn’t Vote For You: Activist investors have a new arrow in their quiver thanks to the recent Securities and Exchange Commission universal proxy rule. Previously, company management and shareholders were allowed to nominate board members and investors would vote in person, by mail, or electronically. But the only way to vote for nominees put forth by dissident shareholders was if you actually showed up to the vote in person. Per the new rule, candidates submitted by any shareholders must appear on any form of the ballot. You know, like regular voting.

– Griffin Kelly

Sports

Washington Commanders Pay $625,000 in Ticket Scandal

(Photo Credit: Dave Adamson/Unsplash)

Taylor Swift isn’t the only one fumbling ticket sales.

The Washington Commanders agreed to pay a $625,000 settlement after the Washington D.C. attorney general accused the NFL organization of roughing up fans by failing to return ticket deposits.

Necessary Roughness

This has been a long time coming for the football team previously known as the Washington Football Team. Former D.C. Attorney General Karl Racine sued the team in November, alleging that since 1996, the Commanders front office had been cheating season ticket holders out of security deposits paid to reserve premium seats.

While fans who paid deposits were supposed to get their money back within 30 days of contract expiration, Racine’s lawsuit alleges the team “intentionally complicated the return process by imposing extra, burdensome conditions that were not previously adequately disclosed” — and then pocketed the cash:

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The majority of the settlement won’t actually go toward refunding fans. In fact, the people who still root for the Commanders will get just $200,000, while $425,000 will be paid to the District for legal fees and costs associated with the investigation. The team is also required to make the refund process more transparent on its website.

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Washington has certainly seen its share of penalty flags. Last year, the House Oversight and Reform Committee filed a report on sexual misconduct in the team’s office. The investigation was laborious and the organization was not forthcoming. Lawmakers said co-owner Daniel Snyder, who was among those accused of sexual misconduct, provided “misleading testimony” and interfered with the investigation.

Who’s gonna buy that? Neverending scandals are not the best look for an organization that’s looking to sell. Earlier this year, Snyder announced plans to sell a majority stake in the team, and the prospective buyers include private equity billionaires Mitchell Rales and Josh Harris, HBCU GO owner Byron Allen, and Amazon’s Jeff Bezos. Whoever the new owner is, they’ll not only have to rehaul the front office and snuff out misconduct but also try to keep the Commanders from being the worst team in the NFC East.

– Griffin Kelly

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Consumer Goods

Tupperware May Have a Short Shelf Life

It’ll take more than airtight packaging to keep Tupperware from souring.

Following a regulatory filing late Friday admitting “substantial doubt about the company’s ability to continue,” share prices for the plastic container company on Monday morning spoiled faster than non-vacuum-sealed devilled eggs sitting at room temperature.

The Tupperware Party is Over

Long gone are the days of suburban Tupperware parties for salesmen to pitch the plastic container product line. And yet, the Tupperware corporation seemed to resist joining the 21st Century economy. Here’s a prime example: the Kleenex of food-storage containers only started selling their not-as-ubiquitous-as-you’d-think products at Target last year, in what was marked as a major strategy shift to tap major retail revenue streams.

But the pivot to modernity has proven to be perhaps too little, too late. Last week, the company said that a violation of its credit facility covenants is a probable outcome due to cash restraints, and it likely doesn’t have enough liquidity to support ongoing operations without additional funding. Along with the doom-and-gloom, the company announced a series of penny-pinching maneuvers — none of which seemed to convince Monday’s traders that there was anything left to be preserved:

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Tupperware said it would be pursuing right-sizing efforts (read: layoffs), while also reviewing its real estate portfolio and engaging financial advisers to improve its capital structure.

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Its share price plummeted around 50% Monday and is down some 94% over the past 12-month period. It’s now at risk of being delisted from the New York Stock Exchange for failing to file an annual report.

“The company is doing everything in its power to mitigate the impacts of recent events, and we are taking immediate action to seek additional financing and address our financial position,” CEO Miguel Fernandez said in a press release. Sounds like the party really is over for Tupperware.

– Brian Boyle

Extra Upside

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It’s back: Fyre Festival founder says a comeback is in the works.

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Far from the tree: Shipments of Apple Macs dropped 40.5% year-over-year.

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Just For Fun

Bath time.

That’s no puddle.

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