A small activist investment fund wants to be the tail that wags the dog after information technology heavily weighted its company’s portfolio in DigitalBridge Group stock. It believes the company should consider a sale if electric current efforts neglect to boost shareholder value.
Legion Partners Asset Management, with a portfolio today of about $280 1000000, began its investment in DigitalBridge during the third quarter of 2020 with a value of $30.4 million. In the start quarter of 2021, the stock rose, providing a valuation of $77.2 million. It continued its impressive climb to $94.5 million on August 16, 2021.
However, a year subsequently, on August xv, 2022, the stock’south value roughshod to $51.one meg. Today, Legion’s investment is worth approximately $35.6 meg.
At a recent Bloomberg Activism Forum, Legion Chief Investment Officer Chris Kiper said that if the stock doesn’t capeesh within the next 12 to 18 months, what he believes could triple in value in the next ii years, DigitalBridge should consider a sale.
DigitalBridge’s leadership nether Chief Executive Officer Marc Ganzi and its moves to transform the company over the past ii years were lauded by Kiper.
Based on a 2023 sum-of-its-parts analysis, he estimates that at that place is potentially an 80% upside on where the shares are trading and that DigitalBridge could triple in value by 2025.
If Ganzi tin’t run across Kiper’s growth expectations, Kiper said the company should consider selling to companies like Blackstone Group Inc., KKR & Co., EQT AB, Brookfield Asset Direction Inc., and Macquarie Group Ltd.
Legion is a small investment firm, with its most significant position in DigitalBridge, representing about 15% of its investments, with branded footwear retailer Genesco Inc. shut to virtually xiv%.
Legion doesn’t have an impressive track record every bit a corporate activist
In July 2021, Legion sought to revamp the lath of Genesco simply failed in its efforts every bit all nine directors from the visitor’southward slate were elected.
In its communications with Genesco shareholders to select their slate of directors, which was 75% female and included an proficient in diversity, disinterestedness, and inclusion, Legion touted its success with Bed Bath & Beyond Inc. that resulted in “tangible governance enhancements and cloth share cost appreciation. At that time, the stock was trading at $28.72. This afternoon it traded at $two.76.
They also highlighted the benefits they provided to department store Kohl’s Corporation, whose stock was trading at $51.43. Today it is trading at $25.07.
Without the help of Legion’due south hand-picked board and its insistence on changing the corporate culture, which Legion believed could grow sales by 4% to half dozen% annually, Genesco saw financial 2022 net sales increment $35.vi% to $2.4 billion from $1.8 billion in Fiscal 2021 with selling and administrative costs decreasing.
It’s not likely that Legion has the horsepower to force a sale
DigitalBridge informed Bloomberg that its arroyo is best for investing in digital infrastructure and delivering superior, long-term value. The visitor said information technology is pleased to take the support of Legion and other shareholders and remains committed to maintaining an open and constructive dialog.
Legion doesn’t announced to have the support to force a sale if near-term objectives aren’t met.
As Digital Span’south 13th
largest shareholder, Legion owns iii,058,555 shares. Nevertheless, they pale compared to other institutional owners (See Superlative 13 Owners Below) such as Vanguard Group Inc., 23,044,201; Wafra Inc., 14,435,399; and Blackrock Inc., 10,410,575.
DigitalBridge, under Ganz, has been transforming from a diversified real estate investment trust to an alternative asset director specializing in digital infrastructure, including cell towers, data centers, cobweb, and pocket-size cells.
In July, Digital Span Group announced a i-for-four reverse stock divide where investors would meet their total shares reduced past 3 quarters. Of form, opposite splits aren’t always positive news, but Ganzi said the company’s long-term strategy and business model have never been more robust.
Ganzi’s employment contract with the company states that if he can bring DBRG to $40-plus and brand certain it stays there for three months – at that place’southward an over $100 million bonus waiting for him.