Hasbro, as most of you are aware, is a publicly traded corporation. Without going into a full economics lesson on that, it essentially means that their shareholders, particularly those that own large chunks of their shares, have a large influence on what their current and future strategies will look like. Due to this, if you (or your company) owned a large enough percentage of their stock, you too could poke your head in and nominating board members to take over leadership if elected.
This is currently what is going on over at Hasbro. A hedge fund called Alta Fox has picked up 2.5% of Hasbro's shares, and with that put forward five new candidates for Hasbro's upcoming 2022 Annual Meeting of Shareholders where board positions are traditionally voted on. This event has been less than peaceful, as Hasbro and Alta Fox are not currently in agreement with how certain aspects of the business are being run.
I've summarized some of their arguments below if you are curious. While Alta Fox seems to mainly be focused on Wizards of the Coast, a big shakeup like this could have cascading effects on our little horse cartoon too. Especially with how critical they have been of eOne. More below!
As mentioned above, Alta Fox currently owns 2.5% of Hasbro and argues that their strategy would promote rapid growth for the company, moving away from Hasbro's current "Brand Blueprint" idea that we have lived under for years here in ponyland. Here is a quick summary of things pointed out by Alta Fox in their press release back in February:
- Alta Fox has nominated 5 people to Hasbro's board of directors for the annual election at Hasbro's 2022 annual meeting of shareholders, including Matthew Calkins, a founder and CEO of Appian Corporation, Jon Finkel, a professional Magic the Gathering and Poker player, Marcelo Fischer, CFO at IDT Telecom, Rani Hublou, a corporate leader from a variety of previous companies, and Carolyn Johnson, CTO at American International Group.
- Alta Fox argues that Hasbro's brand blueprint strategy has failed.
- They point out that Hasbro's Executive compensation exceeds many other
companies, including Apple, and that their CEO pay at 16.7 million is
223x the median Hasbro employee.
- They contend that Hasbro overpaid for eOne, and that the stock still hasn't recovered since it's drop after acquisition back in 2019.
- They want separate Wizards of the Cost in a tax-free spin-off, meaning
it could work outside of Hasbro's brand blueprint strategy.
- Alta Fox argues that they could take Hasbro's stock price to over $200 (it is currently ~$88 at the time of this article)
- They launched a https://freethewizards.com/ Website explaining their case
Today, Hasbro responded with their own massive press release, going into detail on why Alta Fox overall is disconnected and incorrect with their current roadmap for the future both Wizards of the Coast and the company as a whole. You can read the full thing here. Have a list of some of their interesting points:
- Hasbro argues that none of these board nominations are qualified and gives details into each. One being a MTG player with no experience in the corporate world, and others having experience only in industries outside of what Hasbro currently works with.
- Hasbro argues that Alta Fox has cherry-picked specific metrics to make
their criticisms look good. Particularly pointing to Covid's 2020 dip,
which Alta Fox blames on eOne.
- Hasbro believes the Alta Fox Tax-Free spinoff strategy for Wizards of
the Coast, (one of their most successful brands with 150% growth over
the last five years), is bad value for shareholders.
- Hasbro backs their new CEO Chris Cocks, citing his hand in boosting
Wizards of the Coast during his time as president/CEO of Wizards, and point out that the current team already has a plan in place that doesn't work with what Alta Fox is bringing forward in discussions behind the scenes.
- They argue that their brand blueprint strategy is about building their brands across multiple platforms, particularity digital in an increasingly digital world.
- Hasbro has launched a counter website - "https://www.hasbrogameplan.com"
There is no doubt that Hasbro has been very digital focused during our time with them, and even more-so with Generation 5. Their focus on Netflix and Youtube for us here in ponyland is a testament to that. When it comes to investor related things for any publicly traded companies, it's always difficult to see through the walls PR and boasting. Both Alta Fox and Hasbro have put forward their arguments with the usual flair and careful metric selection you'd expect when this much capital is being pushed around. Who do you think is in the right? Is the current path Hasbro is following going to lead to a bright future for the company despite its current dip and lack of complete recovery after Covid? Or is Alta Fox and its vision for Wizards the something they might want to try out?
Feel free to discuss below! Or just post pretty ponies. That's about all I'm going to do for the rest of the day after digging into this rabbit hole.
Thanks to Lucas for the heads up!
