Hestia Capital Partners LP, Permit Capital Enterprise Fund, L.P. and their affiliates (the "Investor Group"), who beneficially own approximately 7.2% of the outstanding common stock of GameStop Corp. ("GameStop" or the "Company") (NYSE: GME), announced today that they have issued a detailed investor presentation titled "More Change Is Needed". The Investor Group has nominated two highly qualified directors, Paul J. Evans and Kurtis J. Wolf, for election to GameStop's 2020 Annual Meeting scheduled for June 12, 2020.
By Yasin Ebrahim
Hestia Capital Partners LP, Permit Capital Enterprise Fund, L.P. and their affiliates (the "Investor Group"), who beneficially own approximately 7.2% of the outstanding common stock of GameStop Corp. ("GameStop" or the "Company") (NYSE: GME), today sent a letter to its fellow stockholders setting the record straight on the Company's poor track record of capital allocation. The letter details how seven of the current Board members caused the Company to issue $825 million of debt from fiscal years 2012 to 2016, largely to undertake a $1.3 billion share repurchase at an average price of $29.86 per share, while six of these same Board members sold approximately $35.8 million of their own stock at an average price of $47.93 per share during this time. These actions are directly responsible for the $420 million of senior notes that the Company has coming due in March 2021. This, along with other missteps by the Board, contradicts the Board's claim that they have strengthened the Company's balance sheet through a prudent and balanced capital allocation strategy.
What happened Shares of GameStop (NYSE: GME) opened sharply lower this morning, and it only got worse from there. Heading into the last hour of trading Monday, the video game retailer was down more than 10%, giving back a part of the massive run-up it enjoyed in April.
Following last Friday's stinging criticism from the hedge funds that own a 7.2% stake in the company, GameStop (NYSE: GME) struck back yesterday with a letter to stockholders lambasting the activist investors. The news release claims the proxy fight is "founded on baseless claims and significant misrepresentation of facts" and is reducing shareholder value by interfering with company operations. Referring to Hestia Capital Partners and Permit Capital Enterprise Fund as the "Dissident Stockholders," GameStop launched a scorching counter-case against the activists' attempts to install two members of their choosing on GameStop's board of directors.
GameStop Corp. shares were up 5% in extended trading Monday after the retail chain of video games and consumer electronics released a letter to shareholders, offering an update on its Reboot Plan to reduce costs and debt amid criticism from shareholder activists. Among the talking points: GameStop said it exited fiscal 2019 with about $500 million in cash after generating $62.3 million in adjusted operating income, despite a challenging sales environment. GameStop also claimed to improve its capital structure, allowing it to reduce debt by $401 million and repurchase 38.1 million shares for $199 million, using the proceeds from the sale of non-core business units. GameStop shares have plummeted 43% in the last 12 months, while the broader S&P 500 index is up 4% over the last year.
GameStop Corp. (GME) (the “Company”) today announced that it has filed a detailed investor presentation titled “Driving Value for All Stockholders,” highlighting GameStop’s significant recent refreshment of the Board and management, as well as leadership’s successful progress on executing the business transformation plan “GameStop Reboot.” The information provided in the presentation supports the Board’s contention that its slate of experienced director nominees are better qualified than the two candidates nominated by Hestia Capital Partners, LP and Permit Capital Enterprise Fund, LP’s (“Hestia Capital” and “Permit Capital,” or collectively, the “Dissident Stockholders”) to guide GameStop through its turnaround and deliver returns to all stockholders.
GameStop (NYSE: GME), Foot Locker (NYSE: FL), and The Michaels Companies (NASDAQ: MIK) plunged today with only Foot Locker avoiding a 10% intraday drop, after comments from Federal Reserve Chair Jerome Powell shook the markets. Retailers, among other hard-hit industries during the COVID-19 economic slowdown, were hoping for a swift rebound in consumer activity as some states slowly reopen parts of the economy.
Investors need to pay close attention to GameStop (GME) stock based on the movements in the options market lately.
GameStop Corp. (GME) (the “Company”) today issued a letter to stockholders reiterating its history of extensive engagement with all stockholders, including Hestia Capital Partners, LP and Permit Capital Enterprise Fund, LP (“Hestia Capital” and “Permit Capital,” or collectively, the “Dissident Stockholders”), and outlining the significant steps it has taken to comprehensively refresh its Board, management team, and corporate governance practices within the last two years. The letter urges stockholders to use the BLUE proxy card to vote “FOR ALL” of GameStop’s 10 highly qualified director nominees in connection with the Company’s upcoming Annual Meeting of Stockholders (the “Annual Meeting”) to be held at 8:00 a.m. CT on June 12, 2020.
GameStop Corp. (GME) (the “Company”) today issued a letter to stockholders highlighting its comprehensively refreshed Board of Directors that possesses the diverse array of perspectives and requisite skillsets, including deep industry and institutional knowledge, to execute the transformation and continued growth of its omni-channel video-game business. The letter notes that Hestia Capital Partners, LP and Permit Capital Enterprise Fund, LP have nominated two candidates who lack the qualifications or experience to serve on GameStop’s Board of Directors.
Shares in GameStop (GME) rose as much as 5% in after-market U.S. trading on Monday, after the video game retailer told shareholders it made “significant progress” on advancing cost-cutting plans.As a result of its strategic turnaround plan, GameStop said it exited the full year 2019 with about $500 million in cash after generating $62.3 million in adjusted operating income, despite a challenging sales environment. Debt was reduced by $401 million and share repurchases amounted to $199 million by using the proceeds from the sale of non-core business units.In addition, GameStop said that it cut adjusted full-year 2019 expenses by $130.4 million. Inventory was reduced by 31% at FY2019 year-end, which enabled a 160 basis point gross margin expansion and “significantly” enhanced GameStop’s working capital and overall balance sheet strength, the company said.Furthermore, the company announced that it begun to wind down its underperforming operations in Denmark, Finland, Norway and Sweden.In the run-up to its annual shareholder meeting in mid-June, GameStop urged shareholders to discard any white proxy card received from dissident stockholders and use the blue proxy card to vote “for all” of GameStop’s 10 director nominees.Shareholders and activist firms Hestia Capital Partners, LP, with a 7.2% stake and Permit Capital Enterprise Fund, LP, are asking for Hestia’s founder, Kurtis Wolf, to join the company’s board as a stockholder representative. That’s in addition to the demand that GameStop addresses its cost structure, increases liquidity, aligns management’s compensation with performance, and pursues an innovative strategic plan.The video game retailer slammed the demands claiming that the dissident shareholders were running a “costly and distracting proxy fight, founded on baseless claims and significant misrepresentation of facts, in an attempt to remove two highly qualified independent directors who bring valuable experience and continuity to the Board”.GameStop shares have plummeted 27% this year driving analysts’ bearish outlook on the stock’s prospects. Out of 5 analysts covering GameStop, 3 rate it as hold, and 2 say sell, giving the stock a Moderate Sell consensus. The $3.81 average price target also suggests shares can pullback another 17% over the coming year. (See GameStop stock analysis on TipRanks).Related News: Apple To Reopen More Than 25 U.S. Stores This Week Uber Pops More Than 6% On Second Round Of Layoffs, Site Closures Ray Dalio Picks Up These 3 “Strong Buy” Stocks More recent articles from Smarter Analyst: * Macy’s Spikes 17% On Refinancing Plan To Weather Coronavirus Crisis * Redfin Brings Back Employees as Housing Market Heats Up * Eli Lilly, Junshi Biosciences To Start Human Testing Of Covid-19 Antibodies By Q2 * Merck Joins Race For Covid-19 Vaccine; Shares Rise 4.4% In Pre-Market Trading
In the latest trading session, GameStop (GME) closed at $4.43, marking a -0.23% move from the previous day.
The value investor's first quarter of 2020 Continue reading...
GameStop Corp. (GME) (the “Company”) today issued a letter to stockholders highlighting the significant progress that it has made advancing GameStop Reboot, its business transformation plan, and the critical importance of having a stable, skilled, and informed Board for continued diligent execution of the plan and the Company’s long-term success. The letter notes that Hestia Capital Partners, LP and Permit Capital Enterprise Fund, LP’s (“Hestia Capital” and “Permit Capital,” or collectively, the “Dissident Stockholders”) campaign distracts from leadership’s ability to continue to execute GameStop Reboot and deliver returns to all stockholders.
GameStop (GME) has issued a letter to stockholders urging them to vote for Gamestop’s 10 ‘highly-qualified’ directors at the upcoming annual meeting on June 12. According to GameStop, the two candidates nominated by ‘dissident stockholders’ Hestia Capital Partners and Permit Capital Enterprise Fund “lack the qualifications or experience to serve on GameStop’s Board of Directors.”“Hestia Capital Partners and Permit Capital are running a costly and distracting proxy fight, founded on baseless claims and significant misrepresentation of facts” the company stated.It points out that over the last two years, the company has ‘comprehensively refreshed’ the board to oversee its business transformation strategy – GameStop Reboot. “Our refreshed Board benefits from the fresh perspectives of our newest directors and the institutional memory of our longest-serving directors, all of which is critical to our successful execution of this transformation plan” GameStop says.According to the letter, “Hestia Capital’s founder, Kurtis Wolf, has “rejected settlement offers to avoid a proxy fight that would have included a stockholder representative simply because he was not the stockholder representative.” It also points out that these dissident stockholders supported a ‘reckless’ share buyback of $500 to $700 million in 2019 despite the fact the company had an upcoming $350 million debt maturity.GameStop shares surged 64% in April driven by the disclosure of additional share purchases by a high-profile investor, the ongoing proxy fight, and a business update- but have since dropped back 23%. And the outlook from the Street appears grim with a Moderate Sell consensus. In the last three months, GameStop has received 3 hold ratings, 2 sell ratings and no buy ratings. Meanwhile the average analyst price target of $3.81 indicates 14% further downside potential lies ahead.“We are downgrading shares to Neutral from Outperform given the significant headwinds that GameStop faces from coronavirus and the challenging current-gen video game retail marketplace” explained Wedbush analyst Michael Pachter. (See GameStop stock analysis on TipRanks).Related News: Autodesk Earnings: Here’s What To Expect Today Google, Apple Roll Out Coronavirus Contact Tracing Technology Facebook Workplace Hits 5 Million Paid Users As Remote Work Demand Rises More recent articles from Smarter Analyst: * Microsoft Seeks $2B Stake In India’s Jio Platforms- Report * Boeing Cuts 6,770 Jobs In U.S.; CFRA Upgrades Stock To Buy * Google Faces Arizona Lawsuit Over ‘Unfair’ Location Data Storing * Novavax Seeks To Make 1 Billion Covid-19 Vaccine Doses; Top Analyst Ramps Up PT To $61
Burry, the head of Scion Asset Management, sold about $3.4 million of shares of the videogame retailer. He now owns a stake of 4.3%, down from 5.3%.
GameStop (NYSE: GME) business was hurting even before the COVID-19 outbreak, so a pandemic bursting on the scene that closed all nonessential retail should have brought it to its knees, if not killed it off. While the conventional wisdom says the migration of video game play to digital and downloads has the retailer biding its time until the console upgrade cycle kicks in, a new report suggests that not only has the coronavirus not done in GameStop, it may have actually taught it how to thrive in this new economy. With schools closed, businesses shuttered, and everyone on lockdown and in self-isolation, video game sales and gameplay are soaring.
They also allege the board dumped their own shares while the video game retailer was buying back stock.
There's a fight a-brewing at troubled gaming retailer GameStop , and the evidence has been arriving in my mail and on a couple of voicemail messages left on our home phone. The voicemail messages were also from the company's board of directors, imploring me to vote their "blue" proxy card.