13D weekly report - Oct 21, 2024 to Oct 25, 2024

Glendon Capital Management Sends Letter to Frontier Communications (FYBR) Opposing Sale to Verizon for $38.50 Per Share

Key Summary: On October 23, 2024, Glendon Capital Management (9.7%) opposed Verizon's proposed acquisition of Frontier Communications at $38.50 per share, arguing it undervalued the company’s assets and earnings potential.

Market Cap: $9 billion | Frontier Communications Parent, Inc., together with its subsidiaries, provides communication and technology services in the United States.

On October 23, 2024, Glendon Capital Management (9.7%) opposed the proposed acquisition of Frontier Communications by Verizon at $38.50 per share, claiming it undervalued Frontier's assets and earnings potential. Glendon argued that Frontier's enterprise value was at least $26 billion—30% higher than the $20 billion reflected in the Verizon deal—citing flawed discounted cash flow and peer analyses by Frontier's Board. The firm also criticized the rushed scheduling of the stockholder meeting and record date, urging an extension to allow for a thorough assessment of Frontier's standalone value. Source

Maple Rock Capital Seeks Board Expansion and Leadership Dialogue at Algoma Steel Group Inc (ASTL)

Key Summary: On October 25, 2024, Maple Rock Capital Partners urged the Board to engage in discussions about the company’s strategy and leadership, proposing an expansion of the Board and the appointment of their nominee.

Market Cap: $1 billion | Algoma Steel Group Inc. produces and sells steel products primarily in North America. 

On October 25, 2024, Maple Rock Capital Partners sent a letter to the Board, requesting a constructive dialogue regarding the company's strategic direction and leadership. Their proposal includes expanding the Board’s size and potentially appointing a nominee designated by them to join the Board. Source

Southwest (LUV) Enters Agreement with Elliott, Expanding Board with 6 New Directors

Key Summary: On July 8, 2024, Elliott Investment Management L.P. called for a leadership overhaul at Southwest Airlines due to ongoing underperformance and dissatisfaction, urging the Board to reconstitute with independent airline executives and source a new CEO externally. Following this, Elliott proposed a fundamental strategy change and announced plans to nominate ten board candidates, criticizing current management for poor performance. On October 14, Elliott requested a Special Meeting of Shareholders on December 10, 2024, to elect eight independent nominees and remove eight current directors, stressing the urgent need for governance reform.  On October 23, 2024, Elliott Investment Management entered into a cooperation agreement with the company.

Market Cap: $17 billion| Southwest Airlines Co. operates as a passenger airline company that provides scheduled air transportation services in the United States and near-international markets.

• On July 8, 2024, Elliott Investment Management L.P. urged the Board to implement a leadership overhaul due to sustained underperformance and shareholder dissatisfaction. Following extensive feedback from shareholders and industry stakeholders, Elliott criticized recent actions by the Board, such as reducing revenue guidance and adopting a "poison pill" to thwart Elliott's stake increase. Elliott advocated for immediate Board reconstitution with independent, experienced airline executives and a new CEO sourced externally.
• Press release
• On August 5, 2024, Elliott Investment Management L.P. stated its belief that the company needed fundamental changes to improve its strategy and performance. They proposed reconstituting the Board, enhancing the leadership team by finding a new CEO and independent Board Chair, and conducting a comprehensive business review to develop and implement a new strategy to achieve industry-leading performance. Source
• On August 13, 2024, Elliott Investment Management L.P. (11%) stated that it intends to nominate ten candidates to the Board. This move follows Elliott’s call for board reconstitution, new leadership installation, and a comprehensive business review to restore Southwest’s industry-leading position. Highlighting ongoing poor performance and board resistance, Elliott emphasizes the need for change. Source
• On August 26, 2024, Elliott Investment Management sent a letter to the shareholders, expressing concerns over the company's declining performance due to poor leadership by CEO Bob Jordan and Executive Chairman Gary Kelly. Elliott criticized the management's entrenchment tactics and emphasized the need for a transparent and credible process to reinvigorate the company.
• On September 10, 2024, Elliott Investment Management praised the Board for resigning seven directors, noting it as unprecedented. They emphasized the need for further changes and expressed confidence in their nominees to guide the airline forward. Source
• On September 24, 2024, Elliott Investment Management (10.2%) sent a second open letter to the shareholders, announcing their intent to call a special meeting in the coming weeks due to the urgent need for leadership change. They accused Southwest of obstructing this change through defensive actions, including setting "false record dates" to disenfranchise shareholders. Elliott urges shareholders to ensure their voting rights by recalling any loaned shares before Southwest's next record date on October 7.
• On September 26, 2024, Elliott Investment Management criticized Southwest Airlines during its Investor Day, stating that CEO Bob Jordan has failed to deliver acceptable financial results and is unfit to lead the company’s proposed changes. They highlighted past promises of profitability enhancements that resulted in deterioration, questioning the board's support for Jordan. Elliott expressed determination to call a special meeting for shareholders to advocate for an independent board capable of improving the company's performance.
• On October 14, 2024, Elliott Investment Management, holding approximately 11% of Southwest Airlines Co. (NYSE: LUV), announced its request for a Special Meeting of Shareholders on December 10, 2024. Elliott aims to elect eight independent director nominees and remove eight current directors, emphasizing the urgent need for governance changes at Southwest. Source
• On October 23, 2024, Elliott Investment Management entered into a cooperation agreement with the company and pursuant to it, the company announced the appointment of six new independent directors—David Cush, Sarah Feinberg, Dave Grissen, Gregg Saretsky, Patricia Watson, and Pierre Breber—effective November 1, 2024. Additionally, Elliott has withdrawn its request for a Special Meeting of Shareholders and will not nominate candidates for the Board.

Vector Capital entered a Cooperation Agreement with LivePerson, Inc  (LPSN)

Key Summary: On October 20, 2024, Vector Capital entered a Cooperation Agreement with the company. On August 20, 2024, Robert P. LoCascio nominated two director candidates to the Board to address stock declines and operational issues. In 2022, Starboard (9.7%) nominated new directors, criticized the company's performance, and sought support for its candidates. Following an agreement to appoint one director each from Starboard and the company, Starboard withdrew its 2023 nominations.

Market Cap: $109 million | Liveperson, Inc., together with its subsidiaries, provides conversational commerce solutions..

Vector Capital

On October 20, 2024, Vector Capital (12.24%) entered into a Cooperation Agreement with the company and pursuant to it, the company will nominate Dan Fletcher as a Class III director at the 2024 Annual Meeting, and following the meeting, the Board will appoint one candidate from a mutually agreed pool of two as an Independent Director per Nasdaq standards.

Robert P. LoCascio

On August 20, 2024, Robert P. LoCascio (2.4%), Founder and former CEO of the company filed a preliminary proxy statement nominating Walter Bachtiger and Michal Czwarno for election to the Board of Directors. LoCascio aims to revitalize the company's strategic direction amidst recent challenges, including significant stock value decline and operational setbacks. Source

Starboard

• On February 25, 2022, Starboard (8.5%) issued a letter to the company nominating a slate of director candidates, including Peter A. Feld, John R. McCormack, Vanessa Pegueros and Yael Zheng , for election to the Board at the  2022 AGM. Source
• On April 7, 2022, Starboard (9.7%) delivered a letter to the Board highlighting its concerns with the company's stock price underperformance, deteriorating financial performance, missed expectations, execution issues and poor corporate governance practices. Further, it stated that it remains open to working constructively with the company to reach a mutually agreeable resolution.
• On May 2, 2022, Starboard (9.7%) filed proxy materials seeking support for its nominees.
• On May 9, 2022, Starboard (9.7%) delivered a letter to the shareholders reiterating its concerns with the performance of the company and seeks support for its nominees at the upcoming AGM.
• On May 31, 2022, Starboard (94%) delivered a letter to the shareholders reiterating its concerns and seeks support for its nominees at the upcoming AGM.
• On July 20, 2022, Starboard entered into an agreement with the company and pursuant to it, the company agreed to appoint one director candidate to be identified by Starboard and one director candidate to be identified by the company.
• On May 5, 2023, Starboard delivered a letter to the shareholders nominating a slate of director candidates for election to the board at the 2023 AGM. It expressed its serious concerns about the company's deteriorating financial and stock price performance and the severe lack of competent leadership under CEO Robert LoCascio. Source
• On July 24, 2023, Starboard  withdrew its previously submitted notice of intent to nominate three persons for election to the board at the 2023 AGM. Source

Nut Tree and Caspian Oppose Sale of Martin Midstream Partners (MMLP) to MRMC

Key Summary: On October 22, 2024, Nut Tree Capital Management L.P. and Caspian Capital L.P. announced their opposition to the proposed sale of Martin Midstream Partners L.P. (MMLP) to Martin Resource Management Corporation (MRMC) for $4.02 per common unit not owned by MRMC.

Market Cap: $155 million | Martin Midstream Partners L.P., together with its subsidiaries, provides terminalling, processing, storage, and packaging services for petroleum products and by-products primarily in the United States. 

On October 22, 2024, Nut Tree Capital Management L.P. and Caspian Capital L.P. announced their opposition to the proposed sale of Martin Midstream Partners L.P. (MMLP) to Martin Resource Management Corporation (MRMC) for $4.02 per common unit not owned by MRMC. Together, Nut Tree and Caspian hold approximately 13.2% of MMLP's outstanding units and are aligned with unaffiliated unit holders to protect the company's long-term value. They believe the sale price undervalues MMLP and that MRMC would benefit disproportionately if the merger proceeds. Nut Tree and Caspian plan to file a proxy statement with the SEC to solicit votes against the transaction at the upcoming special meeting. Source

Starboard Highlights Salesforce's (CRM)Operational Gains and Future Potential

Key Summary: On October 20, 2024, Starboard highlighted Salesforce Inc.'s significant improvements in operating margins and profitability in an investor presentation. The stock nearly doubled due to a focus on efficiency and shareholder value. Starboard suggested Salesforce could achieve a "Rule of 50" score through enhanced revenue growth and operational efficiency, particularly with its new offering, Agentforce. In a previous presentation on October 20, 2022, Starboard expressed concerns over Salesforce's declining stock price but noted potential for significant growth in free cash flow per share.

Market Cap: $250 billion | Salesforce, Inc. provides customer relationship management technology that brings companies and customers together worldwide.

On October 20, 2024, Starboard issued an investor presentation that highlighted its analysis of Salesforce Inc., emphasizing the company's significant improvements in operating margins and profitability over the previous two years. Salesforce's stock had nearly doubled due to its increased focus on efficiency and shareholder value. Starboard suggested that Salesforce could achieve a "Rule of 50" score by enhancing revenue growth and operating margins, positioning the company for compelling future valuations. They believed Salesforce's new offering, Agentforce, would further boost revenue growth and operational efficiency.

Past

On October 20, 2022, Starboard issued an investor presentation in which it expressed its concerns that the company's stock price has declined significantly and opined its belief that Salesforce has an opportunity to significantly grow free cash flow per share over the next few years.

Starboard issued an investor presentation Pfizer Inc (PFE)

Key Summary: On October 20, 2024, Starboard issued an investor presentation analyzing Pfizer Inc., highlighting its contributions to public health during the COVID-19 pandemic through its vaccine and treatments. It noted that Pfizer's stock had underperformed compared to peers, leading to a market value decline of $20 to $60 billion since 2019.

Market Cap: $163 billion | Pfizer Inc. discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products in the United States, Europe, and internationally. 

On October 20, 2024, Starboard issued an investor presentation outlining its analysis of Pfizer Inc., emphasizing its significant contributions to public health during the COVID-19 pandemic through its vaccine and antiviral treatments. However, it notes that Pfizer's stock has dramatically underperformed relative to peers, resulting in a market value decline of $20 to $60 billion since 2019. Starboard identifies issues related to innovation, capital allocation, and R&D efficiency, suggesting that a renewed focus on execution and innovation could enhance Pfizer's valuation and performance.

Starboard issued an investor presentation on Kenvue Inc (KVUE)

Key Summary: On October 20, 2024, Starboard issued an investor presentation discussing Kenvue Inc.'s recent performance and strategic positioning after its spin-off from Johnson & Johnson.

Market Cap: $44 billion | Kenvue Inc. operates as a consumer health company worldwide. 

On October 20, 2024, Starboard issued an investor presentation discussing Kenvue Inc.'s recent performance and strategic positioning after its spin-off from Johnson & Johnson. The presentation highlighted Kenvue's strong brand portfolio and growth potential in consumer health markets while noting that its stock had underperformed since the IPO. Starboard identified issues in Kenvue's Skin Health and Beauty segment, which lagged behind competitors in growth and profitability, and argued for a renewed focus on execution to improve overall performance.

Biglari Capital Corp issued a presentation on Cracker Barrel Old Country Store (CBRL)

Key Summary: On August 16, 2024, Biglari Capital Corp (9%) nominated Board candidates to Cracker Barrel Old Country Store, Inc.

Market Cap: $1 billion| Cracker Barrel Old Country Store, Inc. develops and operates the Cracker Barrel Old Country Store concept in the United States.

Background: 

• Biglari lost five proxy campaigns to elect directors in the FY 2011, 2012, 2013, 2014 and 2020
• On November 5, 2021, Biglari Capital Corp (8.7%) issued a letter to shareholders expressing its concerns on the performance of the company that it has lagged behind both the peer median and the S&P MidCap 400 Index since the onset of Covid-19 and since the 2020 shareholder meeting held on November 19, 2020. Further, it urged that the Board should consider a more aggressive dividend payout policy.
• On December 14, 2021, Biglari Capital Corp (8.7%) issued a letter to shareholders expressing its concerns on the performance of the company  It urged that the Board should consider a more aggressive dividend payout policy.
• On June 6, 2022, Biglari Capital Corp (8.8%) issued a letter to shareholders reiterating its concerns.
• On August 18, 2022, Biglari Capital Corp (8.8%) delivered a letter to the company nominating Jody L. Bilney and Kevin M. Reddy for election to the Board at the 2022 AGM. Source
• On September 28, 2022, Biglari Capital Corp entered into an agreement with the company, leading to the expansion of the Board from ten to eleven members and the appointment of their nominee, Jody L. Bilney. Source

Update:

• On August 16, 2024, Biglari Capital Corp (9%) nominated Milena Alberti-Perez, Julie Atkinson, Sardar Biglari, and Michael W. Goodwin for election to the Board at the 2024 annual meeting. On August 18, 2024, they submitted a supplemental nomination for Michelle Frymire, bringing the total number of nominees to five. Source
• On September 23, 2024, Biglari Capital Corp (9.3%) filed proxy materials seeking support for its nominees.
• On September 23, 2024, Biglari Capital Corp withdrew their nomination of Julie Atkinson and Michelle Frymire as nominees for election at the Annual Meeting. With the withdrawal, Biglari Capital Corp intend to solicit proxies to elect the remaining Nominees to the Board at the Annual Meeting. Source
• On October 1, 2024, Biglari Capital Corp filed proxy materials seeking support for its nominees.
• On October 8, 2024, Biglari Capital Corp. issued a letter to shareholders expressing concern over the company's declining market value, which has dropped over $2.9 billion since 2019. Despite ownership of 2,069,141 shares and attempts to highlight management failures, the Board's appointment of CEO Julie Felss Masino and her transformation plan have not restored confidence, leading to a 50.9% decrease in share price since her appointment. Biglari criticized the Board for its poor capital allocation decisions, including costly new stores and unsuccessful brand launches, which have resulted in significant losses. He emphasized the need for a Board overhaul and proposed focusing on core operations, halting new store openings, and improving existing store performance to regain customer traffic.
• On October 24, 2024, Biglari released an investor presentation titled 'Cracker Barrel is in Crisis,' reiterating its concerns and seeking votes for its nominees.

Murchinson Seeks Governance Reforms at Upcoming AGM of Nano Dimension (NNDM)

Key Summary: On January 22, 2023, Murchinson Ltd. (5.1% shareholder) demanded a special meeting to amend Nano Dimension's governance, remove CEO Yoav Stern and three directors, and appoint two new independent directors. Despite shareholder approval in March 2023, the company contested the meeting’s validity. Murchinson continued criticizing governance, the Board’s actions, and lavish spending, reaffirming its goal to replace the Board at the 2024 AGM. On October 9, 2024, Murchinson raised concerns about AGM delays and potential shareholder disenfranchisement, requesting ADS conversion and proposing director changes and governance amendments at the AGM. On October 22, 2024, Murchinson sent a letter to the company requesting the inclusion of resolutions in the December 6 AGM agenda to improve corporate governance.

Market Cap: $504 million | Nano Dimension Ltd., together with its subsidiaries, provides additive electronics in Israel and internationally. 

• On January 22, 2023, Murchinson  Ltd  and certain funds (5.1%) delivered a letter to the Board demanding that the company convene a special general meeting of shareholders  to allow shareholders to vote upon resolutions proposed by the Proposing Shareholders to improve the company’s corporate governance by way of (i) amending certain provisions of the Company's Amended and Restated Articles of Association, including to allow shareholders to fill Board vacancies and remove directors at a general meeting by a simple majority vote, (ii) removing several members of the Board, namely, the Chairman of the Board and CEO Yoav Stern, and current directors Oded Gera, Igal Rotem and Dr. Yoav Nissan-Cohen and (iii) appointing two new highly-qualified, independent and experienced director nominees, Kenneth H. Traub and Dr. Joshua Rosensweig, as directors of the company(such demand, the “Special Meeting Demand”). The Special Meeting Demand instructed the Board to immediately, and no later than February 12, 2023, call the Special Meeting, and hold it no later than 35 days thereafter, as required by the Companies Law. Source
• On February 13, 2023, Murchinson  Ltd  (5.1%) called on the company to hold a special meeting to remove four incumbent directors, including its chairman/CEO, and install two independent board members. Source
• On March 6, 2023, Murchinson Ltd issued a presentation outlining why it believes change is urgently needed at Nano Dimension.
• On March 6, 2023, Nano Dimension Ltd (14.5%) stated that it intends to engage in communications with the company regarding opportunities to enhance shareholder value and improve corporate governance, including through potential changes in the corporate structure, potentially, among other options, including changes to the composition of the Board. Source
• On March 9, 2023, Nano Dimension Ltd delivered a letter to the board proposing a non-binding indicative offer to acquire the remaining outstanding shares  for $18.00 per share in cash.
• On March 10, 2023, Anson Funds (5.1%) issued a letter to the Board to express its disappointment in the company’s apparent refusal to constructively engage with its shareholders. In addition, Anson Funds called on the board to implement a meaningfully larger return of capital program and expressed its concern that the company is overcapitalized and its belief that management’s recent actions highlight poor corporate governance at the company. It also urged the board to halt the proposed takeover of Stratasys, Ltd. Source
• At the special general meeting held on March 20, 2023, the shareholders voted in favor of the Proposing Shareholders’ proposals to (i) amend certain provisions of the company’s Articles of Association, (ii) remove four incumbent members of the Board, including Chairman and Chief Executive Officer Yoav Stern, and (iii) appoint two director nominees, Kenneth H. Traub and Dr. Joshua Rosensweig, as directors of the company. Although the Proposing Shareholders believe that the Special Meeting was valid, including that Messrs. Traub and Rosensweig were duly elected to the Board at the Special Meeting, the company is challenging the validity of the Special Meeting in Israeli court, which the Proposing Shareholders are vigorously defending. Most recently, the Israeli court issued an order stating that Messrs. Traub and Rosensweig shall serve as non-voting observers on the Board during the pendency of the litigation.
• In addition to the Israeli litigation, on March 27, 2023, the company filed a lawsuit against Murchinson Ltd and certain other third parties.
• On May 1, 2023, Murchinson Ltd (5.8%) filed a lawsuit against the company and certain other third parties, including Mr. Stern seeking to recover its costs and attorneys fees and punitive damages arising from the company's Complaint. Source
• On May 2, 2023, Anson Funds (6.2%) stated its belief that the allegations by the company contained in the complaint are without merit and intend to defend themselves. Source
• On June 27, 2023, Murchinson delivered a private letter to the Board expressing its concerns over the increased tender offer price for Stratasys shares and the lack of due process and shareholder approval. It criticizes potential plans for a hasty equity issuance that would dilute shareholders' interests.
• On July 20, 2023, Murchinson (5.9%) sent a letter to the Board expressing concerns about the delayed AGM and the Board's alleged attempts to disenfranchise shareholders. It also informed the Board of its decision to convert a portion of ADSs held by Nomis Bay into Ordinary Shares, which was completed on July 18, 2023. As a result, Nomis Bay now holds 1,500,000 ADSs and 3,000,000 Ordinary Shares.
• On July 31, 2023, Murchinson demanded the company to add resolutions to improve corporate governance at the AGM on September 7, 2023. This includes electing experienced and independent director nominees, amending the Articles of Association, and replacing/removing Board members. Source
• On August 17, 2023, Murchinson released an investor presentation detailing why they believe wholesale change to the Board is urgently required to restore accountability, address broken governance and drive shareholder value at the company. The Investor Presentation also details the Proposing Shareholders’ five-pillar plan to improve leadership, capital allocation and corporate governance at the company, which they believe can only be accomplished through a reconstituted Board. The Proposing Shareholders therefore encourage the shareholders to support the proposals to remove the incumbent directors, elect their independent nominees and improve corporate governance at the AGM, scheduled for September 7, 2023. The Proposing Shareholders believe their independent nominees who would join current non-voting directors Kenneth Traub and Dr. Joshua Rosensweig, have the right skill sets and expertise to put the company on the path to shareholder value creation. 
• On October 25, 2023, Murchinson (6.6%)delivered a letter to the company demanding that the company add to the agenda of the EGM of Shareholders scheduled to be held on December 13, 2023 various resolutions proposed by them, including resolutions to (i) remove Mr. Yoav Stern and Mr. Oded Gera from the Board, (ii) appoint two highly-qualified director nominees, Ms. Timor Arbel-Sadras, and Mr. Ofir Baharav (the “Murchinson Director Nominees”), to the Board, and (iii) amend certain provisions of the company’s Articles of Association, including the addition of a new Article relating to certain major transactions involving the company requiring shareholder approval. Source
• On December 7, 2023, Murchinson Ltd. sent a letter to the Board informing that it's converting some ADSs into Ordinary Shares to hold more than 5% of voting rights. This conversion is aimed at protecting shareholders' interests. Murchinson plans to demand a special shareholder meeting and propose a new article requiring approval for acquisitions over $50,000,000. These actions are taken due to the Board's lack of responsiveness and concerns about the CEO's recent actions and statements.
• On June 28, 2024, Murchinson Ltd (7.1%) issued an open letter to shareholders criticizing CEO Yoav Stern and the Board. They revealed that Mr. Stern and the Board recently took a company-funded trip to Alaska despite a recent 25% workforce reduction to cut costs. Murchinson suspects Nano might be in deal talks with Desktop Metal due to a recent spike in Desktop Metal’s stock price and urges the Nano Board to seek shareholder approval for any strategic deals. They also expect a ruling from the Israeli Court on the validity of the March 2023 EGM vote, where shareholders supported Murchinson’s proposals. Pending various lawsuits, Murchinson affirms its commitment to replacing the Board and Mr. Stern at the 2024 AGM.
• On October 9, 2024, Murchinson sent a letter to the Board, criticizing the delay in holding the AGM and expressing concerns that the Board may be attempting to disenfranchise shareholders by scheduling the AGM as late as possible under Israeli law. Murchinson requested the conversion of a portion of ADSs into Ordinary Shares and indicated its intention to submit proposals at the AGM, including nominating two to three new directors, removing current directors, and amending the Articles of Association to require shareholder approval for major transactions.
• On October 22, 2024, Murchinson sent a letter to the company demanding the inclusion of various resolutions in the agenda for the AGM on December 6, 2024. These resolutions aim to enhance corporate governance and reform the Board by electing independent directors Mr. Robert Pons and Mr. Ofir Baharav, and by amending the Articles to declassify the Board and require shareholder approval for major acquisitions. Source

Joseph Stilwell Backs Generations Bancorp (GBNY) Sale to ESL Federal Credit Union

Key Summary: On October 8, 2021, Joseph Stilwell (9.91%) expressed concern that the company’s asset value was undervalued in the market. On October 23, 2024, Stilwell (6.7%) supported the company's sale to ESL Federal Credit Union after members of the Group sold shares, and previously indicated intentions to propose a shareholder resolution or nominate a director for the 2025 annual meeting.

M.Cap: $33 million | Generations Bancorp NY, Inc. operates as a holding company for Generations Bank that provides various banking products and services. . 

• On October 8, 2021, Joseph Stilwell (9.91%) stated his belief that the value of the company’s assets is not adequately reflected in the current market price of the company’s Common Stock.
• On October 23, 2024, Joseph Stilwell (6.7%) reported that following the company’s announcement of its sale to ESL Federal Credit Union, members of the Group have sold shares of the company's Common Stock. Stilwell expressed support for the transaction, believing it serves the best interests of all shareholders. Earlier, on May 22, 2024, they indicated intentions to propose a shareholder resolution for the company’s sale or nominate a director for the 2025 annual meeting, which was followed by the company's sale announcement on September 24, 2024. Source

Kirkland's (KIRK) and Beyond, Inc. Form Strategic Partnership to Revitalize Bed Bath & Beyond, Backed by Osmium Partners

Key Summary:  On May 24, 2024, Osmium Partners (9.8%) urged Kirkland's board to consider a transaction with a strategic buyer or partner due to undervaluation. They emphasized strengths and proposed a value creation plan, stressing exploration of strategic alternatives. On October 18, 2024, Kirkland’s and Beyond, Inc. announced a strategic partnership to enhance the Bed Bath & Beyond brand with a new neighborhood store format and a $25 million investment from Beyond. Additionally, Osmium Partners (9.7%) expressed support for the proposed transactions between the two companies.

Market Cap: $27 million | Kirkland's, Inc. operates as a specialty retailer of home décor and furnishings in the United States.

On May 24, 2024, Osmium Partners (9.8%) delivered a letter to the board stating that the company was materially undervalued and urged the board to consider a transaction with a strategic buyer or partner and for the company to hold an investor day before June 26, 2024. They emphasized Kirkland's strengths such as omni-channel retailing, physical retail scale, high incremental margins, e-commerce efficiency, and large customer base. Osmium proposed a value creation plan, suggesting parallels with successful retailers like Five Below. They also outlined a potential return profile for a strategic buyer and stressed the importance of exploring strategic alternatives amidst favorable market conditions. Additionally, they addressed concerns regarding the Chairman's tenure and called for transparent communication and action to drive shareholder value.

Valuation insight

A Potential Value Creation Plan

The potential value creation plan suggested leveraging Kirkland’s brand strength and physical store footprint for growth. Five Below, valued at 2.5x sales, served as a model with annual 3% SSS comps and low-teens new store openings. Kirkland’s, with 7 million yearly consumer transactions, a $120 million e-commerce business, and 1 million+ social media followers, could have driven new store openings annually with 1%+ SSS. This could have accelerated a return to $560 million in revenue and $50 million in EBITDA, potentially re-rating the share price to $27 based on a seven multiple of EBITDA. Additionally, Kirkland’s physical stores offered valuable opportunities for e-commerce retailers to manage returns efficiently, as returns were approximately 15% of sales, potentially creating a negative 30% EBITDA margin. With 75% of home furnishings purchased in physical retail stores and 25% online, Kirkland’s physical retail stores could have filled white space opportunities, especially considering that 10-15% of the competition had liquidated over the last several years.

A Potential Return Profile for a Strategic Buyer

• As for the potential return profile for a strategic buyer, based on Kirkland’s 2024 trajectory, Osmium Partners suggested that a strategic buyer paying $7 per share or $90 million could have achieved a 57% IRR over three years. This would have involved adding 45 new stores, increasing revenue to $560 million, and generating $50 million in EBITDA. Additionally, they highlighted Kirkland’s capital efficiency, achieving 25% ROE in 2022, and proposed maximizing revenue per store to $1.4 million for additional value.
• On October 18, 2024, Kirkland’s and Beyond, Inc. have formed a strategic partnership to enhance the Bed Bath & Beyond brand through a new neighbourhood store format and a $25 million investment from Beyond to support Kirkland’s growth. Source
• On October 18, 2024, Osmium Partners (9.7%) sent a letter to the company expressing support for the proposed transactions between the company and Beyond, Inc.

Dream Chasers Capital Group nominated two directors to Carver Bancorp, Inc (CARV)

Key Summary:  On July 23, 2024, Dream Chasers Capital Group LLC (5%) stated that it was nominating two new directors to the board and urging shareholders to vote for them at the upcoming annual meeting.

Market Cap: $9 million | Carver Bancorp, Inc. operates as the holding company for Carver Federal Savings Bank that provides consumer and commercial banking services for consumers, businesses, non-profit organizations, and governmental and quasi-governmental agencies primarily in New York.

• On December 12, 2022, Dream Chaser’s Capital Grup (5.51%), Shawn Paul Herrera  (1.68%) and Kevin Scott Winters  (3.83%) entered into the Voting Agreement because they all believe that the Company represents an attractive investment based on the Company’s business prospects, strategy, and share price. They believe that the Company is undervalued, and they intend to push for operational changes to enhance shareholder value.
• On December 20, 2022, Jeffrey John Bailey (7%) stated his belief that the Company is undervalued, and he intends to push for operational changes to enhance shareholder value. Source
• On July 23, 2024, Dream Chasers Capital Group LLC (5%) stated that it was nominating two new directors to the board and urging shareholders to vote for them at the upcoming annual meeting. Dream Chasers believed these nominees would drive a new growth strategy, enhancing profitability and shareholder value. They warned that any resistance to their nominations could negatively impact Carver’s stock price and capital-raising ability, posing a risk to the bank’s future. Source
• On October 24, 2024, Dream Chasers Capital Group LLC filed proxy materials seeking support for its nominees.