Activist investors to Occidental, GameStop: We are coming for your boards

Activist investors to Occidental, GameStop: We are coming for your boards

  • Carl Icahn is targeting Occidental Petroleum's board of directors.
  • The notable billionaire upped his stake from 2.5% to 10%
  • Similarly, Hestia Capital and Permit Capital want new changes at GameStop

Multiple activist investor hedge funds are upping their campaigns against oil giant Occidental Petroleum and video game retailer GameStop.

Icahn quadruples-down against Occidental

Notable billionaire activist investor Carl Icahn appears to have taken advantage of the recent dip in Occidental Petroleum (NYSE: OXY) and now owns nearly 10% of the company, according to The Wall Street Journal. This represents an increase of around four-fold from the end of 2019.

Icahn has been a very vocal opponent of Occidental’s $38 billion acquisition of Anadarko. His opposition appears to have been spot-on as the combined entity is worth a mere $11 billion.

Icahn is now pushing to replace Occidental’s entire board, including CEO Vicki Hollub who was the main architect of the merger.

Icahn said in a Wednesday interview he believes Occidental was “delusional” to think it can win over the long-term by outbidding industry behemoth Chevron with the top prize being Anadarko. Occidental was also out-maneuvered by Warren Buffett whose $800 million dividend is safe. Meanwhile, ordinary shareholders will see their dividend payments fall from 79 cents a quarter to 11 cents. 

Icahn now wants a new board with a focus on holding management accountable. The board also needs to be committed to giving shareholders a bigger say in the business, especially if oil prices recover.

Consortium wants big representation at GameStop

A small group of hedge funds and activist investors including Hestia Capital Partners and Permit Capital Enterprise sent a letter to GameStop demanding a stockholder be named as a director, The Wall Street Journal separately reported.

Combined, the two firms own around 7.5% of GameStop’s stock and previously threatened a proxy battle if new blood isn’t added to the board and a higher stock buyback program isn’t announced.

Recent action taken by the company, including naming a new CEO and increasing its buyback program appears to have fallen short of expectations. The addition of three new independent directors to the board along with changes to director tenure and confirmation four other directors will step down this year and two more next year are merely a “step in the right direction,” according to WSJ.

The two funds said in a Thursday letter it is now ready to nominate candidates for election to GameStop’s board of directors. In particular, a director with a “meaningful stake in the equity” needs to become a reality.

Shares of GameStop have fallen roughly 90% from its highs of more than $60 in 2007. The majority of these losses occurred over the past five years.

By Jayson Derrick
Jayson Derrick has been writing professionally about stocks since 2011. He is particularly interested in alternative investments, hedge funds, and activist investing. He is a big fan of NHL hockey and lives in Montreal, Canada with his wife and four year old daughter.

Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.