This newsletter is my “creative outlet” to write about investing, corporate governance, and other topics I find interesting. This newsletter is especially fond of:
Corporate governance and stewardship
Critiquing activist situations
Companies and/or industries I think are undergoing an interesting inflections
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Charlie Munger famously said, “Show me the incentive, and I will show you the outcome,” but connecting incentives to outcomes can be tricky. It’s such a simple and straightforward concept, but there are a lot of moving parts.
The (re-launched!) Premium Newsletter is my attempt at connecting incentives to outcomes through the lens of corporate governance.
For example, I explore “real time” situations and look for interesting governance signals, like indicators of strategic options and other noteworthy inflections, before they potentially happen and/or gets priced in. It’s a fun way to learn corporate governance and how incentives drive outcomes. Emphasis on LEARN.
Premium’s mission is to “teach you to fish”, not “give you fish” so please manage your expectations accordingly. You still have to do your own fundamental work to determine actionability, risks, and trade-offs of the governance “connections” being explored.
If you’re curious about the content, I’ve unlocked 3 premium write-ups you can check out:
On November 13, 2020, I wrote about HD Supply potentially evaluating strategic alternatives with pay-off likely occurring within 30 days (if it were to happen):
[I believe] HD Supply is seriously evaluating strategic alternatives (regardless of interest by Lowe’s), and the stock isn’t appropriately pricing in the possibility a transaction may happen sooner rather than later.
The write-up touches upon media news flow, “negotiating in public”, capital allocation planning cycles, activism, and how the process of selling can play out over years.
On November 16, 2020, Home Depot announced an agreement to acquire HD Supply for $56.00 up 25% from the $44.81 write-up date 3 days earlier.
On June 4, 2020, I discuss LivePerson and what I consider one of the most egregious equity grants of 2020:
Long story short, LPSN granted executive stock options in May 2020 with an exercise price of $27.39 materially below the grant date stock of $37.96.
I walk through how this below market price grant is possible (they implemented a 30-day average price formula) and why I think shareholders should be demanding changes.
LivePerson has a history of peculiarly timed equity grants so it’s not a complete surprise this happened.
Evangelizing good corporate governance is important to me so I make it a point to shine a light on bad practices when I find them and show how insiders can manipulate the governance process to enrich themselves.
On May 7, 2020, I explain why I think activist Marathon Partners is going to pursue a proxy contest at e.l.f. Cosmetics with the likely outcome being a settlement:
Upon further examination of Marathon’s 13D filing, I believe Marathon is setting the table to run a proxy contest at ELF. It’s hard to know for certain, but I wouldn’t be surprised if Marathon and e.l.f. Cosmetics end up collaborating on an activist settlement very soon.
This post was in early May 2020 when the stock was $12.99 and before Marathon actually nominated a slate of directors in late May. As I expected, ELF and Marathon would announce a settlement on July 2, 2020.
This write-up gets into activist investing game theory, and shows how you can identify and anticipate activist moves before they happen. In particular, this post highlights how an activist investor uses the nomination deadline as leverage to drive changes and/or settlements.