GameStop Corp. GME confirmed Wednesday that it had received a letter from Tiger Management LLC urging a strategic review and action to restore shareholder confidence. CNBC first reported the news.
What Happened
“GameStop has a long track record of welcoming communication from all of its shareholders and values constructive input that may help increase shareholder value,” a GameStop spokesperson told Benzinga.
Tiger Management encouraged the firm to stop making acquisitions, divest certain business segments and repurchase stock.
"We view the recent management departures and crisis of confidence as an unprecedented opportunity for the Board to launch a strategic review and revive shareholder confidence in the sustainability of the GameStop business model," the letter read, according to CNBC.
Why It's Important
Notably, Tiger is newly invested in GameStop; a comparison of the investor’s two most recent quarterly filings show a 25,000 stake taken in the period reported May 15.
The sudden, steep engagement and the fact that Tiger issued requests at all are factors redolent of activist investors preparing proxy battles, but the shareholder assured in the letter that it remains a passive investor.
"To the extent that you fail to implement a turnaround plan, we merely intend to sell our shares and redeploy capital toward more attractive investment opportunities," the letter read.
GameStop shares had fallen as much as 2.7 percent on the earliest reports, but by the time of publication, it had recovered half of its losses.
Shares traded around $13.57 at time of publication and are down about 45 percent over the past year.
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