Tuesday, June 16, 2009

Ten Things That Happened This Proxy Season Worth Noting

Broc Romanek, Editor of TheCorporateCounsel.net Blog has done a nice job of compiling ten developments that he believes will lead to more heated online shareholder activism campaigns next year.

1. First Use of Live Internet Voting - In his "IR Web Report," Dominic Jones brought us the news (and analysis) that Intel decided to tackle the challenges of allowing for "live" voting online at its annual shareholders meeting this season. Intel also has this "Stockholder Forum" to allow shareholders to submit queries in advance.

2. Soliciting Shareholder Feedback on Compensation Practices - Taking a page from Schering-Plough's efforts to survey investors about pay practices, Amgen is inviting its shareholders to offer comments on TIAA-CREF's "Ten Questions for Evaluating CD&As." The invitation is presented on page 51 of the company's proxy statement (page 59 of the PDF), directing shareholders to a survey questionnaire on the company's site.

3. Soliciting Shareholder Feedback on Disclosures - Barclays used this "2009 Annual Report Survey" to solicit feedback on its annual report. The company promised to provide responses directly to the questioners - and intends to post a selection of them.

4. Emergence of Proponent Sites Designed to Solicit Mutual Funds - ExxonMutualFundShares.org is a new type of site, jointly created by the proponents of four ExxonMobil shareowner proposals (Bob Monks among them). Mutual fund holders who are concerned that ExxonMobil has not done enough to address climate change and address certain corporate governance issues can send a message to the 25 largest mutual fund families through the site.

5. Easier Ability to Track Voting Results - Smart companies like to predict how their voting results will be at shareholders' meetings so that their board and senior managers are not surprised. Hiring a proxy solicitor that has shareholder intelligence abilities is the most common way to accomplish this - but some of the tools that solicitors use are now freely available. For example, a relatively new site - FundVotes.com - tracks how mutual funds vote on specific types of proposals. And it's free. The site tracks both management and shareholder proposals - and it tracks voting trends by specific fund families.

6. Use of "RSS Street" to Follow Developments - Dominic Jones blogged about the rise of a group of web monitoring services that help investors track online mentions of companies they follow. Companies should be doing the same to understand what is being said about them as the online media gradually displaces traditional mainstream media.

7. Use of Corporate Blogs (and Third-Parties) to Solicit Questions - As noted by Dominic Jones in his blog, Microvision used its blog to solicit queries for its upcoming earnings call. The same can be done for annual meetings. In fact, Warren Buffett tried something novel this year - soliciting queries by asking Berkshire Hathaway shareholders to send them to three reporters via email. As described in Warren's annual letter to shareholders, these reporters - independent third parties - then choose the ones they deemed most interesting and important and posed them during the meeting.

8. Use of Twitter to Describe Live Events - Ebay became a pioneer when its resident corporate blogger tweeted the details of its earnings call as it happened, as described by Dominic Jones in his blog. Again, this can be done for annual shareholder meetings - and it helps if the company controls the messaging rather than only have third-parties tweeting during the event (which is becoming more common, like it was during Banc of America's annual meeting this year. I'm not sure how they enforced it, but I hear that live-tweeting and blogging was banned from Target's annual meeting yesterday. If it's true, I think it's not a good idea as that can garner bad publicity and will happen anyways).

9. Investors Communicating Through Social Sites - Another area where companies increasingly are going to have to keep an eye on are the social sites. Beyond the obvious ones - Facebook and MySpace - there is a new player, Broadridge's "Investor Network." It's too early to tell if their social site will really take off, but it's safe to say that social sites generally are here to stay and the likely place will a lot of shareholders will be venting in the future.

10. Much Easier Use of Video Changes Everything - With everyone now walking around with a camcorder in their pocket (ie. their cell phone), no one should presume that what happens at the annual meeting, stays at the annual meeting. As brought to my attention by this blog, an embarrassing moment at an annual meeting could cost an inhouse lawyer or corporate secretary their job. Be prepared for zaniness at meetings by being prepared.

This video below from Fortis' annual meeting - held a few weeks ago - is real and is a "must" viewing. The meeting was delayed a half hour after the management team was pelted with shoes, coins, etc. I particularly liked the dismissive shake of the Chair's head. Sometimes it’s uncanny the way that corporate life imitates Monty Python (remember this "Stoning" sketch):

Monday, June 15, 2009

SEC Proxy Access Rules

The hotly-anticipated draft proxy access rules finally landed on the SEC website last week. Nothing new relative to the ones announced in the earlier press release, but still radical all the same.

You can submit comments to the SEC in a variety of ways, including email or the US Postal Service. It appears the easiest is on their comment webpage for this particular release.

Posted by Mike Levin, Hedge Fund Solutions.

Tuesday, June 9, 2009

Ackman Joins General Growth Board. What's GGP Worth?

Bankrupt shopping mall operator General Growth Properties (Ticker: GGP) announced yesterday that Bill Ackman – fresh off his activist campaign with Target for board representation, has just joined their board.

Ackman owns about 7.5% of GGP’s equity at an average cost of $0.46 per share. He believes the Company will be worth 13x his investment once it emerges from bankruptcy - suggesting a stock price around $6.00 (GGP is currently trading at $1.05).

Thomas Kirchner, the President and Portfolio Manager for The Pennsylvania Avenue Funds (an event-driven mutual fund (Ticker: PAEDX) specializing in activism and arbitrage) disagrees with Ackman’s valuation and challenges his assumptions on his blog The Deal Sleuth.

Thursday, June 4, 2009

May Activist Investments - 48 Companies Targeted

Below is a summary of 48 companies targeted by 51 shareholder activists during May.

This information was extracted from Hedge Fund Solutions' Catalyst Equity Research Report, a free in-depth weekly research on activist investments.

Click Here to subscribe to the FREE report.

Ticker Company Investor
ABTL Autobytel Inc Trilogy Inc
ADF ACM Managed Dollar Income Fund Bulldog Investors
ARIA Ariad Pharmaceuticals Inc Biotechnology Value Fund
ASUR Asure Software Inc Red Oak Partners
ATGN AltiGen Wanger Investment Management
AVCA Advocat Inc Bristol Investment Fund
AXC Advanced Technology Acquisition Corp Bulldog Investors
BASI Bioanalytical Systems Thomas Harenburg
BBEP BreitBurn Energy Partners, L.P. Quicksilver Resources
BVF Biovail Corp Eugene Melnyk
CAV Cavalier Homes Inc GAMCO Investors
CAV Cavalier Homes Inc Legacy Housing
CITZ CFS Bancorp Financial Edge Fund
DITC Ditech Networks Inc Lamassu Holdings
DVD Dover Motorsports Inc. Marathon Capital
ELGX Endologix Inc Elliott Associates
FEP Franklin Electronic Publishers inc Saunders Acquisition Corp
GCS DWS Global Commodities Stock Fund Western Investment
HBRF.OB Highbury Financial Peerless Systems
HWK Hawk Corp GAMCO Investors
JOUT Johnson Outdoors Inc Dolphin Ltd
JTX Jackson Hewitt Tax Service Shamrock Activist Value Fund
JTX Jackson Hewitt Tax Service JTH Tax
KANA Kana Software KVO Capital Management
KONA Kona Grill Mill Road Capital
MATH.PK Mathstar, Inc Salvatore Muoio
MEG Media General Inc GAMCO Investors
MOVE Move Inc. Nierenberg Investment Management
NDD Neuberger Berman Dividend Advantage Fund Western Investment
ORCC Online Resources Corp Tennenbaum Capital Partners
PCBC Pacific Capital Bancorp Santa Ynez Band of Chumash Indians
PFBI Premier Financial Bancorp Hot Creek Capital
PLCE Children's Place Retail Stores Ezra Dabah
PRLS Peerless Systems Corp. Bandera Partners
PRSC Providence Sevice Corp 73114 Investments
PTSG.OB Petrosearch Energy Group Tiberius Capital
RPT Ramco-Gershenson Properties Trust Equity One
SKS Saks Incorporated P Schoenfeld
SNG Canadian Superior Energy Palo Alto Investors
SRO DWS Rreef Real Estate Fund II, Inc Bulldog Investors
SUMT SumTotal Systems Vista Equity Partners
TDS Telephone & Data Systems Southeastern Asset Management
TDS Telephone & Data Systems Inc. Weitz & Co
TOMO TomoTherapy Incorporated Avalon Capital
TUC Mac-Gray Corp Fairview Capital Investment Management
TXCC Transwitch Corp Brener International Group
TXI Texas Industries Shamrock Activist Value Fund
UAHC United American Healthcare Corp Strategic Turnaround Equity Partners
ULU Uluru Inc. Brencourt Advisors
VNDA Vanda Pharmaceuticals Tang Capital

The Winds of Change...

…continue to sweep through the SEC. If management and investors had any doubt that the SEC is serious about emphasizing investor interests, then the membership of its new Investor Advisory Committee should dispel them. SEC Chair Mary Schapiro announced the intent to create the new group in her first policy speech in February. This week the SEC released the roster of members.

And what a group she selected. The membership includes representatives from large mutual funds and other investors (Nuveen, Schwab, Barclays, Ariel), noted activist groups (Fund Democracy, Yale’s Millstein Center, Proxy Democracy, Consumer Federation, and the Council of Institutional Investors), activist investors (AARP, TIAA-CREF, Shamrock Capital and Domini), and labor unions (AFL-CIO). Some academic and industry types (Employee Benefit Research Institute, NYSE, and CFA Institute) round out the committee. No representatives from the companies that the SEC regulates, though.

The mandate appears advisory in nature, and while somewhat vague for now will provide input on possible and proposed regulations, and “matters of concern to investors in the securities markets.” It remains to be seen whether the committee will have real input and authority in the changing environment for regulation of corporate governance.