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Morning Brief: Marcato Skeptical of Deckers’ Latest Announcement

The activist hedge fund firm slammed the footwear company’s plan to appoint two new individuals to its board as “a desperate attempt to avoid accountability.”

  • By Stephen Taub

Deckers Brands, which is locked in a proxy fight with activist hedge fund firm Marcato Capital Management, said on Monday that it plans to appoint at least two new independent directors by its 2018 annual meeting. It also said there will be an equal number of retirements from the existing board. In a press release, the company best known for its UGGs brand of shoes said it is seeking individuals “with highly additive skills and relevant experience, taking into account Deckers’ global, multi-brand, and multi-channel business model.” It also said the new directors will increase board diversity and reduce the average tenure of independent directors. It is working with a director search firm to identify the new individuals.

In response, Marcato, which owns 8.4 percent of Deckers stock, called the announcement “a desperate attempt to avoid accountability for failing to achieve its strategic goals over a period of multiple years.” The hedge fund also called the announcement “a clear admission that the current board lacks the skills, insight, and oversight required to properly lead the company.” Marcato also called out recently departed chairman and former CEO Angel Martinez for selling nearly half of his shares, valued at about $9 million, less than two weeks after leaving the board.

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In other Marcato news, UBS raised its price target on Buffalo Wild Wings from $140 to $148 but cut its rating on the stock from buy to neutral, citing “a more balanced risk-reward given our limited visibility into the likelihood of a takeout.”

Earlier this month, the casual dining restaurant chain surged in price after the Wall Street Journal reported that Roark Capital Group would make an offer to buy the company. However, an official offer never did materialize. The stock continues to trade in the mid-$140s, where it has been since the takeover report. UBS tells clients in a note it raised its price target to reflect a 50 percent probability that a deal gets done. Its valuation based on company fundamentals remains at $140, it adds.

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Balyasny Asset Management disclosed that as of November 15 it owned nearly 4.2 million shares of Hertz Global Holdings, or 5 percent of the car rental giant. At the end of the third quarter, the multistrategy manager did not own any common shares of Hertz, although it did own call options on the shares.

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Point72 Asset Management boosted its stake fivefold in Radius Health to about 2.26 million shares, or 5.1 percent of the pharmaceutical company.

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