In a rare spectacle within the financial arena, activist hedge funds engaged in Disney’s stock are embroiled in a contentious battle, pitting Trian, ValueAct, Ancora, and Blackwells against each other.
The significance of this clash lies in the fact that a proliferation of activist investors in a stock is generally perceived as unfavorable for companies. Surprisingly, in Disney’s scenario, the ongoing hedge fund skirmish is proving beneficial for the entertainment giant’s defense.
The latest development in this activist saga unfolded on Wednesday morning when ValueAct announced the establishment of a confidentiality agreement with Disney, facilitating the sharing of crucial information. In return, ValueAct pledged support for Disney’s existing slate of directors.
Given ValueAct’s reputation for constructive collaboration with management teams, coupled with its discreet efforts to secure endorsements from other institutional investors for proposed changes, the public support from ValueAct was expected.
What makes Wednesday’s announcement pivotal is the official and open nature of the relationship, serving as a crucial defense pillar for Disney. This alliance ensures a guaranteed affirmative vote for Disney’s directorial slate, and potentially, the sway of ValueAct with other institutional investors during future voting.
However, the plot thickens as Trian, likely holding the largest activist stake in Disney at nearly 2% of common equity and voting power, aligns forces with the assertive Ancora. This Trian/Ancora alliance intensifies the activist pressure on Disney’s ability to maintain its current board structure.
Responding to the ValueAct news, a spokesperson for Trian welcomed additional shareholders seeking to address the challenges faced by Disney. Trian emphasized that its board nominees, Nelson Peltz and former Disney executive Jay Rasulo, are poised to bring the necessary changes to the board.
Simultaneously, Disney shareholder and activist Blackwells initiated a separate campaign against Trian and Ancora. Blackwells’ Wednesday release contained pointed criticisms aimed at the two hedge funds. Notably, Blackwells, by nominating three directors for Disney’s board, is waging a counter-fight against the company, with campaign rhetoric leaning towards anti-Peltz sentiments and a pro-Disney turnaround stance.
It’s worth noting that Blackwells is concurrently challenging Peltz’s role on the Wendy’s board in a separate campaign, leading some analysts to speculate that Blackwells’ Disney campaign aims to gain leverage over Peltz in the anticipated Wendy’s battle.
In a unique turn of events, where a conglomerate of hedge funds typically signals trouble for a company, Disney finds itself in a different scenario. The hedge funds invested in Disney are not forming an alliance against the company; instead, they are in direct competition with each other. This unexpected dynamic is likely to bolster Disney’s defense strategy in the face of internal activist tensions.
