Landec, Six Flags, MVC Capital, Dave & Buster’s, and Other 13D Filings

Landec (LNDC)
Legion Partners reported a stake in the fruit and vegetable and biomaterials firm of 1,501,545 shares. That figure accounts for the addition of 381,554 shares from Nov. 21, 2019, to Jan. 8, 2020, at prices ranging from $9.60 to $11 apiece, giving Legion a nearly 5.2% interest in Landec. Legion noted that it made the investment because Landec’s current stock price is much lower than its intrinsic value.

Legion believes that Landec “trades at a significant discount to the sum of its parts,” as the combination of food and pharmaceutical-drug development is “an odd combination…that will never achieve full and fair value.” As such, Legion believes that the Curation Foods unit should be “optimized and divested” to drive shareholder value closer to what Legion sees as fair.

Six Flags Entertainment (SIX)
H Partners Management revealed an interest in the theme-park operator of 5,500,000 shares, equal to 6.5% of the outstanding stock. The holding included the purchase of 500,000 shares on Jan. 10 at prices ranging from $35.11 to $36 apiece and the addition of another 268,347 shares on Jan. 14 at per share prices of $35.57 to $35.88.

H Partners disclosed that it has “engaged in discussions” with Six Flags on “improving governance,” citing the “recent deterioration in [Six Flags] operational and stock price performance.” To that end, H Partners revealed that it wishes to add a representative to Six Flags’ board.

USA Technologies (USAT)
Hudson Executive Capital disclosed on Jan. 21 that it holds 10,385,172 shares of the payments-processing firm, equal to 16.3% of the outstanding stock. Hudson Executive addressed a letter to USA Technologies’ board dated Jan. 17, writing that about 60% of shareholders have voted in support of Hudson’s eight director nominees, far outstripping the votes garnered thus far by the current board members.

To avoid any further proxy fights and to facilitate a quick transition, Hudson proposed that its representatives and two current USA Technologies directors, approved by Hudson, should be seated immediately, with all 10 renominated at the upcoming 2020 annual shareholder meeting.

Hudson believes that such a plan would “conserve precious time and resources that can be focused” on the firm’s various stakeholders. It would also promote stability that would provide a “more productive” search for a CEO and chief financial officer and lead to a better position “to negotiate critical contracts” and resolve Nasdaq relisting conditions.

Far Point Acquisition (FPAC)
Third Point revealed on Jan. 22 that it holds nearly a quarter of the blank check acquisition company’s outstanding stock, equal to 19,692,500 shares. On Jan. 16, Third Point entered into a voting and support agreement with Far Point and Global Blue Holding.

Per the agreement, Third Point would vote its 25% stake in Far Point in favor of Far Point’s acquisition of Global Blue Holding, announced the same day.

In conjunction with the agreement, Third Point affiliates would commit $100 million to purchase Global Blue Holding ordinary shares that will be “immediately contributed” to the newly merged company that will rebrand as Global Blue and trade on the New York Stock Exchange under the symbol GB.

MVC Capital (MVC)
Wynnefield Capital reported a stake in the business-development company of 1,514,379 shares, equal to 8.5% of the tradable stock. On Jan. 17, Wynnefield submitted a stockholder proposal requesting that stockholders adopt a resolution recommending that MVC “take the necessary steps” to either sell itself, liquidate its business portfolio and return funds to investors, or merge with a peer.

Wynnefield urged that MVC no longer initiate any investments into prospective companies “and immediately move forward on one of those three paths.”

Wynnefield feels that this proposal is necessary due to MVC’s “significant decrease in market capitalization…and [because it] has offered a poor total stockholder return,” among other issues.

Increases in Holdings

Dave & Buster’s Entertainment (PLAY)
Kohlberg Kravis Roberts (KKR) revealed that it increased its stake in the casual-dining and gaming firm to 1,938,476 shares. That amount includes the addition of 610,668 shares from Dec. 11, 2019, to Jan. 15, 2020, at prices of $38.44 to $41.93 each. KKR cited that it has engaged and probably will continue to engage Dave & Buster’s regarding a myriad of operational and strategy topics.

Lindblad Expeditions Holdings (LIND)
ValueAct Capital increased its holding of the adventure travel firm to 3,673,247 shares after the purchase of 693,059 shares. Those additions were bought from Nov. 22, 2019, through Jan. 17, 2020, at prices from $14.94 to $17.72 apiece, and give ValueAct Capital a 7.4% interest in Lindblad.

Aptinyx (APTX)
Adams Street Partners raised its stake in the biopharmaceutical to 5,030,628 shares after it bought 1,000,000 shares at an offering price of $3 apiece. That purchase was transacted on Jan. 10 “for investment purposes.” Additionally, Adams Street disclosed that a representative serves on Aptinyx’s board, though Adams Street has no proposals or plans in the works.

Liberty Braves Group (BATRA)
Gamco Investors (GBL) lifted its ownership in the media company to 1,897,954 shares. From Nov. 18, 2019, to Jan. 15, 2020, Gamco sold 7,448 shares at $27.50 to $29.93 each and bought 147,526 shares in a price range of $26.95 to $30.01 apiece. Following those transactions, Gamco now holds nearly 18.5% of Liberty Braves’ tradable stock.

Power Play

Shareholders, Activists Gear Up for SEC Proposals to Limit Access

The 2020 proxy season is about to kick off, and the biggest battle may not be between activists and the companies in their crosshairs but between shareholders and the Securities and Exchange Commission.

That’s thanks to a pair of rule changes the SEC proposed late last year that critics say will limit shareholder rights. The deadline to comment is Feb. 3, and responses are expected to feature critiques from a diverse group of stakeholders, ranging from activist hedge funds that try to force changes at companies to unions that often criticize them for shortsightedness.

One amendment would limit submissions by raising the minimum position size necessary to put forward a proposal. The second—and perhaps the more controversial—rule change would force proxy advisors such as Glass Lewis and
ISS
to submit their recommendations to companies for comment and correction before sharing the reports with their clients

While the SEC argues that the move boosts “accuracy and transparency,” critics say it gives companies too much power and would leave investors with far less time to research proposals.

It’s a very long review process before publication, which shortens the time for investors to perform due diligence, says Ken Bertsch, executive director of the Council of Institutional Investors (CII).

The amendments arrive as shareholders grow increasingly concerned about how companies are run, particularly on issues from compensation to climate change.

CII is one of several constituents rushing to submit a comment before the SEC’s now-extended Feb. 3 deadline. The CII’s November request for extension was cosigned by an unlikely alliance of stakeholders comprising unions, pensions, and comptrollers for New York City and state, and activist hedge funds, such as Elliott Management and ValueAct Capital. The SEC declined to comment.

Write to Carleton English at [email protected]