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Newcomers Shake Up the Proxy Season

Activism is off to a solid start this year, but not necessarily from the usual suspects.

The exterior of Yahoo! corporate headquarters in Santa Clara, California.
Getty Images
The exterior of Yahoo! corporate headquarters in Santa Clara, California.

There have been fifty-three proxy fights launched so far in 2012, according to Factset — about half the activity we saw five years ago.

What may be more interesting than the number of boardroom battles, however, is who's waging them.

Carl Icahn, John Paulson, and other members of the activism establishment are busy as usual but so are Third Point's Dan Loeb, who hasn't been on the scene much for the past five years but is now criticizing Yahoo! for "insouciance" and poor management as he nominates himself and three others to their board.

And Loeb, who recently launched a website, www.valueyahoo.com, to push his cause, has been joined by a host of little-known money managers whose names you may not have heard much about before.

Consider Starboard Value, an investment advisor founded just last year by a group of small-cap experts that now manage over $500 million. They have gotten to work quickly, amassing a 5.3 percent position in AOL and using that perch to dress down the company for wasting money on failing projects, and countenancing a generally poor performance.

Even though AOL recently sold a $1 billion worth of patents to Microsoft — ostensibly caving to one of Starboard's demands — the investors are still threatening a bigger fight this spring.

Then there's a pair of funds called Corvex Management and Marcato Capital, two relatively new investment firms that appear to manage about $500 million apiece. With a combined 7 percent of the stock in the prison operator Corrections Corp. of America, they've teamed up to pressure the company to save on their tax bill by turning into a REIT (real estate investment trust).

Keep an eye out for these folks as well as other less-known players like Balch Hill Capital, Potomac Capital Management, and Stilwell Value, in coming weeks as the annual meeting season begins.

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