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The Morning Brief: Corvex Threatens Special Meeting at Energen

Keith Meister’s firm has boosted its stake in the company to 10.1 percent and is ramping up its activist campaign.

Corvex Management boosted its stake in Energen to 10.1 percent and called on the Birmingham, Alabama oil and gas exploration and production company to add several directors to its board. If it is unable to reach an agreement with Energen, the activist hedge fund firm headed by Keith Meister said it would call a special meeting of shareholders so they can approve an expansion of the size of the board to 15 and Corvex would propose its own nominees to fill the vacancies. Corvex says under Alabama law it can propose a special meeting if it owns at least 10 percent of the shares.

We earlier reported that in June Meister called on the company to put itself up for sale. In late June, Meister said in a filing he was “very disappointed” that the company announced on June 19 it will “continue with a status quo business plan.” Meister noted the stock’s subsequent decline and said he was “troubled by the failure of the process by which the Board came to its decision.” The stock is down about 10 percent since late June and down 16 percent since mid-May.

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Shares of Herbalife dropped 5.25 percent, to close at $62.42, on an overall rough day for stocks of multi-level marketers in response to reports that China may crack down on these types of companies, according to CNBC, which cited a Google-translated report from China’s Phoenix New Media. That report said four government departments will start “to carry out special rectification activities: resolutely eradicate all kinds of MLM organizations.” This would be the kind of vindication Pershing Square Capital Management’s Bill Ackman has been seeking for several years, since he initiated his huge negative bet on Herbalife. The stock is now down nearly 15 percent in the past month alone.

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Melvin Capital Management said that as of July 24 it owned 875,000 shares of Carvana, or 5.6 percent of the online used car dealer. The stock dropped nearly 6 percent on Monday and is down nearly 30 percent since the date of the filing. The investment is passive, according to the regulatory filing.

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Ricky Sandler’s Eminence Capital disclosed that as of August 4 it owned nearly three million shares of New Relic, or 5.5 percent of the software analytics company. This investment is also passive.

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