This content is from: Portfolio

Morning Brief: Engaged Capital Takes Activist Stake in Apogee Enterprises

The activist hedge fund firm says the company’s stock is undervalued and that investors don’t understand how its businesses have improved.

Engaged Capital has taken a 6 percent activist stake in Apogee Enterprises, the maker of glass exteriors to commercial buildings. In a fresh 13D filing, the activist hedge fund firm said the stock is undervalued and that the current valuation discount is unwarranted. It asserts that Apogee owns several market leading businesses that are attractive, high-quality assets. Engaged adds that investors do not appreciate the businesses are “significantly better positioned today than in the past,” as cost reductions have resulted in improved profitability and diversification efforts that have positively altered Apogee’s business mix “into more attractive end markets with reduced cyclicality and appealing growth potential.”

The hedge fund firm headed by Glenn Welling said it has discussed a variety of issues with management and the board about ways to potentially improve the company’s capital allocation practices, operational improvement plans, growth initiatives, investor communications, portfolio optimization and corporate governance, among other topics. Engaged, however, did not communicate publicly any specific plan for unlocking Apogee’s value.

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Avis Budget Group announced it agreed to expand its board to 14 directors under a new revised cooperation agreement with SRS Investment Management. It also said it is terminating the shareholder rights plan it adopted in January. Under the deal, the car rental giant agreed to appoint to the board Jagdeep Pahwa — the president of SRS, which is the company’s largest shareholder — and Carl Sparks, an independent candidate nominated by SRS. Brian Choi, a partner at SRS and a board member since 2016, and Sanoke Viswanathan, an independent director nominated to the board by SRS in 2016, will be re-nominated to the board. “We are pleased to have reached a new cooperation agreement with Avis Budget Group,” said Karthik Sarma, founder of SRS, in a press release jointly issued with the company.

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Tiger Global Management liquidated its stake in eHi Car Services Limited, the Chinese car rental services company. At year-end, the hedge fund firm headed by Chase Coleman was the largest shareholder.

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