13D Weekly Report - Jan 2, 2024 to Jan 5, 2024
$DIS, $BLMN, $DLA, $FREE, $AIM, $SLGC, $OPTT, $PRKA
Table of Contents
Blackwells Capital Nominates Candidates for Disney (DIS) Board, Questions Trian's Campaign
Starboard enters into cooperation agreement with Bloomin' Brands (BLMN)
Forager Fund increased its stake after reaching agreement with Delta Apparel, Inc (DLA)
Notch View Capital Urges Immediate Sale of Whole Earth Brands Inc (FREE)
Kellner Group Appeals for Stockholder Vote Despite AIM ImmunoTech (AIM) Decision
Madryn Asset Management Opposes SomaLogic's (SLGC) Proposed Merger with Standard BioTools Inc.
Paragon Technologies issued a presentation on Ocean Power Technologies (OPTT)
INITIATED
Blackwells Capital Nominates Candidates for Disney (DIS) Board, Questions Trian's Campaign
Key Summary: On Jan 3, 2024, Blackwells nominated 3 Disney board candidates opposing Trian Fund. Trian seeks change due to Disney's underperformance.Market Cap: $167 billion | The Walt Disney Company, together with its subsidiaries, operates as an entertainment company worldwide.
Blackwells Capital
On January 3, 2024, Blackwells Capital nominated three candidates for Disney's board of directors, opposing Trian Fund Management's efforts. Blackwells believed that Trian's campaign was disconnected from Disney stakeholders' needs and driven by personal animus. They also expressed concerns about Trian's association with Ancora Holdings Group, requesting a Disney Board investigation. They argued that their candidates complemented Disney's current leadership better than Trian's nominees. Source
Trian Fund
On January 12, 2023, Trian Fund filed proxy materials for the election of Nelson Peltz, its CEO and Founding Partner, to the Board at 2023 AGM. Trian believes that Disney’s recent performance reflects the hard truth that it is a company in crisis with many challenges weighing on investor sentiment. While we acknowledge that Disney, like many media companies, is undergoing a challenging pivot to streaming, Disney also benefits from owning best-in-class intellectual property, a more diversified business mix, and a Parks business that is enjoying all-time high profitability. As such, we believe that the Company’s current problems are primarily self-inflicted and need to be addressed immediately, including poor corporate governance, prro strategy and operations and poor capital allocation. Source
On January 20, 2023, Trian Fund filed proxy materials seeking support for its nominees.
On January 27, 2023, Trian Fund filed proxy materials seeking support for its nominees.
On February 2, 2023, Trian Fund issued a press release and a letter to shareholders related to the company, which Trian also simultaneously published to its website, located at www.RestoreTheMagic.com
On February 9, 2023, Trian Fund congratulated the company on its recently announced operating initiatives, which are a win for all shareholders and broadly align with Trian’s thinking, and, pursuant to which, Trian announced it is withdrawing its nomination of Nelson Peltz to the board of directors of the Company. Source
On November 30, 2023, Trian Fund stated that it had discussions with Disney's CEO and was offered a meeting with the Board. However, Disney declined Trian's request for Board representation, including Nelson Peltz. Trian expressed disappointment in Disney's performance, citing a loss of around $70 billion in shareholder value since February and underperformance compared to peers and the broader market over the last decade. They believe the recent additions to the Board will not restore investor confidence, and Trian intends to present its case for change directly to shareholders. Source
On December 14, 2023, Trian Fund statd that it intends to nominate two independent director candidates for the Board at the 2024 AGM. Trian believes that Disney has underperformed its potential, with lower earnings per share (EPS) despite significant capital investment and lagging margins in its businesses. Source
BOARD SEAT/ AGM RESULTS
Starboard enters into cooperation agreement with Bloomin' Brands (BLMN)
Key Summary: In Jan 2024, Starboard reached agreement with Bloomin' Brands. In April 2020, Jana Partners added two directors thro' agreement. In Feb 2018, Barington Capital suggested value-boosting recommendationsMarket Cap: $2.4 billion | Bloomin' Brands, Inc. is a holding company. The Company owns and operates casual, upscale casual and fine dining restaurants.
Background
On August 18, 2023, Starboard initiated a 9.9% active stake in the company.
On October 17, 2023, Starboard delivered a presentation at the 2023 Capitalize for Kids Investors Conference highlighting value creation opportunities at the company. Starboard has proposed a turnaround plan for the company which includes focusing on improving the operations and marketing of Outback Steakhouse, which has seen declining traffic. Starboard also suggested making Outback's marketing more fun and highlighted the potential of its growing business in Brazil. Additionally, the investor sees growth opportunities in smaller brands within Bloomin's portfolio, such as Carrabba's, Bonefish, and Fleming's. Starboard's goal is to unlock value for shareholders, similar to its successful strategy with Darden Restaurants in the past.
Update
On January 2, 2024, the company entered into a cooperation agreement with Starboard (9.7%) and pursuant to it, the company appointed Dave George, former Chief Operating Officer of Darden Restaurants, and Jon Sagal, Partner at Starboard Value LP, to its Board. The company also established an Operating Committee, chaired by Dave George, to focus on corporate and operational improvements. Jon Sagal, along with current directors Mike Mohan and John Mahoney, will be members of this committee.
Past
(i) Jana Partners
On April 8, 2020, Jana Partners and the company entered into a cooperation agreement and pursuant to it, they announced that the Company will be adding two new independent directors recommended by Jana Partners to its Board effective July 1, 2020.
(ii) Barington Capital
On February 21, 2018, Barington Capital sent a letter and detailed presentation to the Chairman and CEO recommending that the company implement a variety of measures to improve long-term value. It stated its belief that the company can address its challenges by taking the following steps: (a) spin off its smaller brands (Bonefish Grill, Carrabba’s and Fleming’s) into a new company, leaving Outback to operate independently, in order to improve strategic focus and operating execution at each brand; (b) enhance the guest experience to increase revenues and improve customer loyalty; (c) reduce excessive expenses including advertising and corporate overhead; and (d) improve the Company’s corporate governance and the composition of its board of directors.
Valuation Insight
Barington is convinced that the company’s intrinsic value per share is well above its current market price and believes that if the company effectively executes its recommendations, the value of the company’s stock could increase to approximately $41 per share.
Forager Fund increased its stake after reaching agreement with Delta Apparel, Inc (DLA)
Key Summary: In Oct 2023, Forager Fund planned director nominations for 2024 AGM. In Dec 2023, they cooperated with the company, appointing Timothy Brog as an independent director for the 2024 AGM and withdrew director nominations.Market Cap: $51 million | Delta Apparel, Inc., through its subsidiaries, designs, manufactures, sources, and markets activewear and lifestyle apparel products in the United States and internationally.
Background
On October 11, 2023, Forager Fund (4.9%) sent a letter to the company, stating its intention to nominate four directors for election at the 2024 AGM. Source
On December 14, 2023, Forager Fund (6.8%) entered into a cooperation agreement with the company and pursuant to it, the company agreed to appoint Timothy Brog as a new independent director on the Board, to serve for an initial term expiring at the 2024 Annual Meeting. The Company also agreed to include Mr. Brog among the Company’s slate of director nominees for election at the 2024 Annual Meeting. Forager also agreed to withdraw its notice of shareholder nomination of individuals for election as directors at the 2024 Annual Meeting. Source
Update
On December 14, 2023, Forager Fund increased its stake to 8.3%.
ONGOING
Notch View Capital Urges Immediate Sale of Whole Earth Brands Inc (FREE)
Key Summary: On Jan 3, 2024, they urged an immediate sale due to poor performance, high debt ($411M), and missed forecasts at Whole Earth.Market Cap: $145 million | Whole Earth Brands, Inc. operates as a food company worldwide. It operates through two segments, Branded CPG and Flavors & Ingredients.
Background
On December 29, 2023, Notch View Capital Management (5.9%) stated that it plans to discuss ways to enhance shareholder value with the management and board of directors. Source
Update
On January 3, 2024, Notch View Capital (5.9%) sent a letter to the Board expressing concern about the company's performance and the delayed response to a June 2023 acquisition offer, advocating for an immediate sale due to financial underperformance and rising debt. Despite $300 million in acquisitions, Whole Earth significantly missed its 2023 adjusted EBITDA forecast by over 33%. Profitability fell short, with debt rising due to acquisitions, having reached over $411 million in net debt by September 2023, at 5.4x adjusted EBITDA. Notch View deemed that leverage level unacceptable and saw a target of below 3.0x as achievable by 2027.
Kellner Group Appeals for Stockholder Vote Despite AIM ImmunoTech (AIM) Decision
Key Summary: In Aug 2023, AIM rejected Ted Kellner's board nomination. Subsequently, Kellner filed a lawsuit challenging bylaw amendments. Delaware Court invalidated four Board bylaws favoring Kellner on Dec 28, 2023, but found his nominations non-compliant. Kellner pursued an expedited appeal and sought to delay the Annual Meeting, while advocating for a vote on his nominees.Market Cap: $23 million | AIM ImmunoTech Inc., an immuno-pharma company, focuses on the research and development of therapeutics to treat multiple types of cancers, viral diseases, and immune-deficiency disorders in the United States.
Background
On August 7, 2023, Ted D. Kellner (who, together with Todd Deutsch, owns 6.5%) stated that he had delivered a notice to the Company regarding his intent to nominate himself, Mr. Chioini, and Mr. Deutsch for election to the board at the 2023 AGM. Source
On August 23, 2023, the Company rejected Mr. Kellner's Notice. On August 25, Mr. Kellner sued in the Delaware Court of Chancery seeking declarations that the bylaw amendments are unlawful and accuses directors of breaching fiduciary duties. He requested a quick trial before the 2023 Annual Meeting. Source
On October 13, 2023, Ted D. Kellner filed proxy materials seeking support for his nominees. Source
On November 1, 2023, Ted D. Kellner filed proxy materials seeking support for his nominees.
Update
On December 28, 2023, the Delaware Court of Chancery invalidated four advance notice bylaw provisions that had been adopted by the Board in March 2023, favoring Mr. Kellner. However, the Court found that Mr. Kellner's notice of nominations did not comply with some of the Company's remaining advance notice provisions. Mr. Kellner disagreed with the Court's opinion on this matter and pursued an expedited appeal while seeking to halt the Company's Annual Meeting during the appeal. AIM had announced that it would disregard Kellner Group's nominations, but stockholders still had the option to "withhold" votes for incumbent directors. Mr. Kellner had intended to pursue his appeal and seek relief for a stockholder vote on Kellner Group nominees, even if the Annual Meeting proceeded as scheduled.
Past
In July 2022, Jonathan Jorgl and his nominees, Robert L. Chioini and Michael Rice, collectively known as the AIM Stockholder Full Value Committee, notified AIM ImmunoTech Inc of their intention to nominate Chioini and Rice for the company's board, aiming to replace Directors William Mitchell and Stewart Appelrouth. The committee reiterated its commitment to this cause in August, and later, in September, filed proxy materials seeking support for their nominees. Disagreements arose as AIM considered the nomination notice invalid due to non-compliance with the company's bylaws. Jorgl sued AIM in Delaware's Chancery Court seeking validation of the nomination. In October, AIM's claims against the committee were dismissed, and the committee continued to voice its concerns, especially after discovering alarming statements made by incumbent directors during the ongoing legal proceedings. In November, the Chancery Court denied Jorgl's plea for a preliminary injunction. Although the committee disagreed with this decision, they opted against proceeding with a trial or seeking an appeal. Finally, at the AGM held on November 3, 2022, all three company's director nominees were elected to the Board.
Madryn Asset Management Opposes SomaLogic's (SLGC) Proposed Merger with Standard BioTools Inc.
Key Summary: Madryn Asset Management (4.2%) opposes the SomaLogic-Standard BioTools merger, soliciting "AGAINST" votes.Market Cap: $462 million | SomaLogic, Inc. operates as a protein biomarker discovery and clinical diagnostics company in the United States.
Background
On December 12, 2023, Madryn Asset Management (4.2%) sent a letter to the shareholders regarding the proposed merger of SomaLogic with Standard BioTools Inc. In the letter, Madryn expresses its belief that the proposed merger is not in the best interests of the company's stockholders and solicits proxies from stockholders to vote "AGAINST" the merger at the upcoming Special Meeting scheduled for January 4, 2024. Source
On December 18, 2023, Madryn Asset Management issued an investor presentation titled “The Case for Voting AGAINST the SLGC-LAB Proposed Merger”
On December 18, 2023, Madryn Asset Management launched a website, www.NoSomaLogicMerger.com, to communicate with the stockholders of the company. Source
On December 22, 2023, ISS recommended that stockholders vote “FOR” the pending merger with Standard BioTools at the company’s Special Meeting of Stockholders to be held on January 4, 2024. Source
On December 26, 2023, Madryn Asset Management issued a press release opposing the SomaLogic-Standard BioTools merger due to concerns about inadequate disclosures, potential conflicts of interest, and inaccurate information in an ISS report. It called for an "AGAINST" vote by shareholders. Madryn Asset Management requested ISS to change its merger recommendation, citing inaccuracies, undervaluation, governance issues, and shareholder opposition. Madryn Asset Management revealed SomaLogic's failure to engage with Labcorp before the merger recommendation and called for a delay in the shareholder meeting. Source
On December 29, 2023, Glass Lewis recommended that stockholders vote “FOR” the pending merger with Standard BioTools at the company’s Special Meeting of Stockholders to be held on January 4, 2024
On December 29, 2023, Madryn Asset Management issued a press release expressing strong opposition to the proposed merger between SomaLogic and Standard BioTools Inc. Madryn highlighted increasing public shareholder opposition to the merger, with four SomaLogic shareholders openly stating their intention to vote against it. They called the merger undervalued, criticized the process, and urged shareholders to vote against it.
Update
On January 2, 2024, Madryn Asset Management submitted a letter to the Delaware Court of Chancery that it requested a postponement of the stockholder vote on the proposed stock-for-stock merger with Standard BioTools Inc. due to the lack of public access to filings related to a preliminary injunction motion. The vote was scheduled for January 4, 2024, but key documents were under seal and set to be unsealed after the vote. Madryn expressed concerns about the lack of transparency. They argued that stockholders needed access to all relevant information before voting on the transaction and urged the court to postpone the vote until after January 9, 2024, when the sealed filings would become public.
On January 4, 2024, Madryn Asset Management commented on the adjournments of the Special Meeting related to the proposed merger with Standard BioTools Inc. They also urge the Board to consider alternative options and express readiness for productive discussions. Source
Paragon Technologies issued a presentation on Ocean Power Technologies (OPTT)
Key Summary: Paragon Technologies (3.9%) has raised concerns about Ocean Technologies' financials and initiated legal action following the company's declaration of their nomination letter as invalid. Despite Paragon continuing to seek votes for its nominees, the company has urged shareholders to ignore the nomination letter, stating that such votes will not be counted.Market Cap: $21 million | Ocean Power Technologies, Inc. develops and commercializes proprietary systems that generate electricity by harnessing the renewable energy of ocean waves in North America, South America, Europe, and Asia..
Background
On July 7, 2023, Paragon Technologies (3.9%) provided a letter to the stockholders with respect to its views regarding the Company’s financial condition and the performance of the board. It expressed its concerns about the company's ongoing cash burn and lack of a coherent plan for profitability. It highlighted the company's history of net losses since its inception in 1994, declining share price, failed commercialization efforts, and high operating expenses. Paragon intends to provide a slate of director nominees with the aim of reducing losses, addressing the cash burn, and implementing a go-to-market strategy to create profitable operations at the company.
On July 14, 2023, Paragon Technologies (4%) expressed its concerns about alleged wrongdoing and mismanagement by the board and management. It has requested access to the company's records and will pursue litigation if the board does not comply. Furthermore, it stated that it may make binding or non-binding stockholder proposals or may nominate one or more individuals as nominees for election to the board. Source
On July 17, 2023, Paragon sent an Inspection Demand to the company, requesting access to the company's books and records for the purpose of investigating apparent wrongdoing and/or mismanagement by the Board and/or management. Source
On July 27, 2023, Paragon filed a complaint in the Delaware Court of Chancery to enforce for inspecting Company's books and records.
On August 2, 2023, Paragon Technologies, Inc. issued a press release regarding the company, demanding clear explanations from the board on how the company will fund operations beyond July 31, 2024.
On August 11, 2023, Paragon Technologies (4%) calls on the company to REFRAIN from ALL future equity share sales that will dilute shareholders and immediately announce a significant cost cutting plan to demonstrate the Board’s commitment to protecting shareholder value. Source
On August 25, 2023, Paragon demands corporate governance adherence and shareholder value enhancement, urging to:
Reinstate the Company’s bylaws to their original form prior to Paragon’s calling out the Company’s worsening financial performance
Terminate the Company’s poison pill and grant Paragon its limited waiver
Allow Paragon, as is Paragon’s right as a shareholder, to examine the Company’s books and records
Reconstitute its Board to appoint Paragon’s directors to the Company’s Board.
On August 25, 2023, Paragon Technologies notified its intent to nominate five directors for the company's board at the 2023 annual meeting. On August 29, 2023, Paragon Technologies submitted a second request for an exemption related to the "Section 382 Tax Benefits Preservation Plan" adopted by the company's board on June 29, 2023, limiting ownership to 19.9% of the company's outstanding shares. The company's board has not responded to these exemption requests. Source
On October 9, 2023, Paragon Technologies stated that it has initiated legal action against the board and CEO for alleged breach of fiduciary duties. They sought to appoint three directors to the board and requested an exemption from poison pill provision. Paragon criticized the management for self-serving actions and misleading statements. Source
On October 20, 2023, the Delaware Court of Chancery ruled in favor of Paragon Technologies (OTC PINK:PGNT), ordering Ocean Power Technologies (OPT) to provide Paragon with certain books and records for an investigation. Paragon had made a books and records demand on July 17, 2023, which OPT initially refused, leading to litigation. During the trial, Paragon raised concerns about OPT's financial losses, expenses, and director/officer compensation, as well as actions by OPT's board seemingly aimed at interfering with Paragon's efforts to elect new directors. The Court found that Paragon had a credible basis to suspect wrongdoing and rejected OPT's claim of an improper motive for the demand. Sham Gad, Chairman of Paragon, expressed satisfaction with the decision and urged OPT to work constructively with shareholders. Source
On October 24, 2023, Paragon Technologies sent a letter to the independent directors of the company, raising concerns about recent decisions made by the board. The letter questioned whether the actions taken by the directors are in the best interest of shareholders and suggests that these actions may be aimed at preventing certain director candidates from being presented to shareholders. Paragon highlights several actions, including the adoption of new by-laws, the implementation of a poison pill, engagement of multiple law firms and a proxy defence firm, and the refusal to provide access to company records. Paragon calls for transparency and questions the board's spending decisions in light of OPT's financial situation.
On November 13, 2023, Paragon Technologies notified the Company that Robert J. Tannor notified them of his withdrawal as a nominee, due to health reasons that he is still recovering from, for election to the Company’s board of directors at the Company’s 2023 AGM. Paragon Technologies intends to proceed to nominate the four other candidates previously notified to the Company. Source
On November 17, 2023, a Delaware Chancery Court ruling and evidence suggest a gap between OPT's public statements and financial reality. Paragon calls on OPT to implement a substantial cost-cutting plan and cease issuing equity to safeguard shareholder interests. Source
On November 28, 2023, Paragon Technologies filed proxy materials seeking support for its nominees.
On November 30, 2023, the Delaware Court of Chancery denied Paragon's request for injunctive relief filed on October 9, 2023. As a result, Paragon's nominations and exemption request remain rejected, and they cannot nominate their candidates for the OPT Board at the 2023 Annual Meeting. Source
On December 4, 2023, Paragon Technologies stated that it intends to move forward with its election contest at the Company’s 2023 annual meeting of shareholders (scheduled by the Company to be held on January 31, 2024) and intends to nominate its four director candidates at the annual meeting. Source
On December 11, 2023, Paragon Technologies reiterated its concerns and urges shareholders to vote for its nominees. Source
On December 18, 2023, Paragon Technologies reiterated its concerns and urges shareholders to vote for its nominees. Source
On December 21, 2023, the company announced shareholders may receive materials from Paragon Technologies but advised discarding them, as votes for Paragon's nominees on the blue proxy card will not be counted
On December 29, 2023, Paragon Technologies reiterated its concerns and urges shareholders to vote for its nominees. Source
Update
On January 4, 2024, Paragon Technologies, Inc. reminded shareholders to DISREGARD any WHITE proxy from OPT and issued a presentation on how to vote the BLUE proxy card.
Valuation insight
Paragon believes OPT could be worth +$3 a share, or 10x return, with an improved operating cost structure, disciplined capital allocation, and a realigned focus on potential growth of Marine Advanced Robotics.
Focused Compounding Calls for Special Shareholder Meeting and Proposes Significant Bylaw Revisions at Parks! America, Inc (PRKA)
Key Summary: In January 2020, Focused Compounding disclosed a 17.01% stake and requested discussions. In December 2023, they demanded a special shareholder meeting.Market Cap: $24 million | Parks! America, Inc., through its subsidiaries, engages in acquiring, developing, and operating local and regional theme parks and attractions in the United States.
Focused Compounding Fund
Background
On January 28, 2020, Focused Compounding Fund disclosed 17.01% and sent a letter to the Board seeking discussions with the management, Board and representatives of the company.
On December 22, 2023, Focused Compounding (38.5%) demanded a special shareholder meeting from the Company. The meeting will address five proposals: (i) Repealing certain provisions of the Bylaws to restore them to their 2012 form if amended before the proxy solicitation is complete, (ii) Removing all seven members of the Board as per Section 4.9(a) of the Bylaws, (iii) Amending Section 4.7 of the Bylaws regarding vacancies on the Board, (iv) Electing new Board members, Andrew Kuhn, Geoff Gannon, and James Ford, and (v) Authorizing Focused Compounding Fund to adjourn the meeting if needed for the proposed changes. Source
Update
On January 4, 2024, Focused Compounding filed proxy materials seeking support for its nominees.
Past
Nicholas A. Parks
On January 30, 2019, Nicholas A. Parks (12.06%) entered into discussions with a private equity firm to discuss strategic options involving the company’s stock. Mr. Parks stated that he wishes to continue such discussions in hopes of the following:
To purchase additional shares of the outstanding stock.
To have an active role in company decisions in order to maximize shareholder value.
On September 23, 2019, Nicholas A. Parks (6.28%) stated that he believes the company should acquire a scalable business in order to grow the company’s revenue over time. If unable to identify appropriate acquisitions, to return capital to shareholders via a special dividend or by purchasing its own stock. Source
On January 28, 2020, Nicholas A. Parks entered into a Stock Purchase Agreement with Focused Compounding Fund, LP for the sale of 4,110,000 shares of Common Stock. As a result of the closing of the transactions, Nicholas A. Parks beneficially own approximately 2.00% of the outstanding Common Stock. Source
Marlton Wayne
On December 17, 2018, Marlton Wayne (5.04%) sent a letter to the Board noting its concerns that the company’s public equity trades below its intrinsic value and offering potential solutions to substantially increase stockholder value. In the letter, Marlton outlined a proposed change in capital allocation and corporate governance that they believe is needed to put the company on a path that will reward stockholders:
Return of capital of $1,500,000 through either a Special Dividend of $0.0201 per share representing 13.8% of the market capitalization based on the current share price of $0.1451 or a Modified Dutch Auction Tender.
Forming a Special Committee of Independent Board Members to explore all strategic alternatives to maximize stockholder value, including the disbursement of a Special Dividend, Modified Dutch Auction Tender and/or the sale of the company.
On January 14, 2019, Marlton Wayne (5.04%) sent a letter reiterating its concerns that the company’s current capital allocation strategy and corporate governance are causing the company’s equity to trade at a significant discount. to the Board.
On July 22, 2019, Marlton Wayne (5.04%) delivered a letter to the company demanding the inspection of certain of the company’s books and records