On February 17th, Alta Fox Capital Management, which owns a 2.5% stake in the toy giant Hasbro, called for a spinoff of the organization’s gaming subsidiary, Wizards of the Coast, in a move that investors hope could raise the company’s stock price by $100 per share. Additionally, the firm has nominated five people to Hasbro’s Board of Directors.
“We have attempted to collaborate with Hasbro, but it continues to cling to its failed ‘Brand Blueprint’ strategy,” reads a press release from Alta Fox Capital. “We cannot stand idly by as Hasbro’s Board of Directors makes unforced errors in capital allocation, corporate governance, and investor communication. We believe the Board’s intransigence and missteps are eroding the market share and prominence of one of America’s most iconic companies. If corrective action is not taken in the near term, we fear there will be an irreversible impairment of value at Hasbro. Fortunately, there is an alternative path forward. With a reconstituted Board and properly incentivized management team, we see a clear path for taking Hasbro to at least $200 per share and enabling the Company to rebuild trust with its most passionate customers and fans.”
The five people up for nomination include Matthew Calkins (Founder of Appian Corporation), Jon Finkel (Co-Chief Investment Officer at Landscape Capital Management LLC), Marcelo Fischer (Chief Financial Officer of IDT Corporation), Rani Hublou (Principal at Incline Strategies, LLC), and Carolyn Johnson (former Chief Transformation Officer of American International Group, Inc.). This announcement came ahead of the induction of Chris Cocks as Hasbro’s new CEO. Alta Fox Capital believes that these board nominees will “provide insight and support” to Cocks who will need “a meaningfully refreshed Board that includes shareholder-designated individuals with relevant capital allocation, corporate governance and industry expertise.”
Hasbro has since confirmed the receipt of these nominations. However, in a press release, the organization explained that it believes it has a “highly qualified, independent, experienced, and engaged Board.”
The Profit‘s Take:
Making toys is not nearly as exciting as making movies or video games. There are definitely synergies there, but it’s pointless if the market is not rewarding the vertical integration.