Media giant The Walt Disney Company DIS has had a rough 2023 with the company's share price hitting lows not seen in about a decade.
With activists circling the company, major changes could be on the horizon.
What Happened: Activist investor Nelson Peltz of Trian Fund Management has launched a campaign targeting Disney as he builds a growing stake in the company.
Peltz has pushed for changes at the media conglomerate and to gain a position on the Board of Directors, dating back to January 2023.
In October, it was announced that Trian had bolstered its stake in Disney with aspirations to claim a board seat.
Alongside Peltz's stake in Disney, it was recently announced that investor Ike Perlmutter has put his entire stake in Disney in Peltz's plan of attack. Sources say Perlmutter, who is the former chairman of Marvel, has granted full voting authority of the shares to Peltz.
The Trian stake in Disney is worth around $2.5 billion and would give Trian control of around 2% of outstanding shares to vote with and position the hedge fund as a top five shareholder of Disney.
Trian’s upcoming 13-F filing, expected in mid-November, may shed more light on Peltz’s strategy or indicate changes to his investment in Disney.
It is unknown how large the Perlmutter share count is in Disney stock.
"I acquired Disney stock in 2009 when Marvel was sold to Disney. I have not sold any of the Disney stock I received and, in fact, have added to my holdings over the years," Perlmutter said in a statement.
Perlmutter criticized changes that have happened at Disney over the years and is putting his faith in Trian to push for changes.
"As someone with a large economic interest in Disney's success, I can no longer watch the business underachieve its great potential."
According to Axios, the next window for shareholders to nominate directors opens up on Dec. 5, which could be a key date for Disney investors. Sources said that Peltz plans to nominate himself for a position on the Board of Directors and may nominate an additional director.
Related Link: Disney Q3 Earnings Highlights: Revenue Miss, EPS Beat, 105.7 Million Core Disney+ Subscribers And More
Why It's Important: Peltz’s increasing stake and call for transformation coincide with a significant dip in Disney shares following Bob Iger‘s return as CEO.
Disney shares are down 22% in the last year.
Peltz has not made all his plans known on what he would like to see accomplished with Disney, but has criticized the company’s spending on acquisitions like Fox. Peltz also criticized Disney for not having a succession plan.
The hedge funder ceased his campaign against Disney earlier this year after Iger announced several changes, including a reorganization that included cutting around 7,000 jobs and saving $5.5 billion in costs. Iger also disclosed a corporate reorganization into three segments and set a target for the streaming division to turn a profit in fiscal 2024.
Additionally, he outlined a plan to reinstate Disney’s dividend, which had been paused during the COVID-19 pandemic.
The specifics of what has transpired between Peltz’s earlier cessation of his campaign and his renewed aggressive stance remain ambiguous. Peltz believes Disney shares are undervalued and is pushing for the company to be more accountable for the interest of shareholders.
Disney reports fourth quarter financial results on Wednesday, Nov. 8 after market close. Commentary from the company on costs, dividends, guidance and a succession plan could go a long way to fight off a potential proxy battle from Peltz.
DIS Price Action: Disney shares trade at $83.02 on Thursday versus a 52-week trading range of $78.73 to $118.18.
Read Next: Disney To Acquire Remaining Stake In Hulu, Here's How Much Streaming Platform Could Be Worth
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