Steven Birdsall, chief revenue officer of Anaplan Inc., left, and Frank Calderoni, president and chief executive officer of Anaplan Inc., center, talk with a trader during the company’s IPO on the floor of the New York Stock Exchange in New York York on October 12, 2018.
Michael Nagle | Bloomberg | Getty Images
Activist investors targeted a defeated sector of the stock market this week: cloud software.
It started early Thursday, when Ancora Holdings sent a letter to the board of Everbridge, whose software helps companies respond to emergencies. Everbridge’s last CEO abruptly resigned in December, and Ancora is urging the company to seek a buyer rather than a new leader.
Later on Thursday, two hedge funds known for their activism campaigns disclosed interests in financial planning software provider Anaplan and said they wanted to install four people on the company’s board.
While Everbridge and Anaplan face very different internal challenges, they are part of a group that has been battered this year as investors move from growth and risk to areas like energy and utilities.
Prior to this year’s market swoon, activists largely avoided cloud companies. For the most part, the stock has dramatically outperformed the market for a number of years, leaving little opportunity to unlock value. And most companies in the space don’t have the level of corporate profit that activists prefer.
The most notable exceptions were the file-sharing app Box and big data software company Cloudera, both of which underperformed their competitors.
Box emerged victorious in a proxy battle with Starboard Value in September, in which shareholders re-elected CEO Aaron Levie and two other sitting board members and rejected Starboard’s three board candidates. Cloudera went bankrupt last year after prominent activist Carl Icahn took a position in the stock.
As the cloud basket tumbles to start the year, activists are showing their willingness to take the plunge. The WisdomTree Cloud Computing Fund is down 21% since early 2022, while the S&P 500 index is down 6.4%.
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Anaplan and Everbridge since early 2021
Ancora expressed concern at Everbridge over management churn and poor performance at the federal government level, saying a change of CEO would not be enough to solve all of the company’s problems.
“Everbridge now faces the challenge of rebuilding virtually every aspect of its go-to-market efforts, restructuring its sales force and rebuilding key lost muscle in the marketing department,” Ancora wrote. “While these challenges are solvable, we don’t believe they can be addressed by the current management team.”
Everbridge shares rose 13% on the news. But the stock is still 77% lower than its all-time high in February 2021.
The company’s board responded to the letter by telling investors it would review Ancora’s comments. Everbridge said it has paused all acquisition activities to focus on integrating its products and reducing costs. The company also reiterated its plan to find a new CEO.
“We are considering all opportunities to increase shareholder value and will evaluate Ancora’s perspectives through this lens,” said Everbridge.
‘Attractive’ opportunity
Anaplan has not experienced the same level of volatility as Everbridge. The stock peaked in February 2021 and has since fallen about 40%. The stock rose 7.6% on Friday.
Keith Meister’s Corvex Management and Scott Ferguson’s Sachem Head Capital Management teamed up to drive change at Anaplan. Meister, who was previously CEO of Icahn Enterprises, signed an agreement earlier this month to coordinate their efforts.
According to regulatory documents released Thursday, Corvex and Sachem Head bought Anaplan stock because they viewed it as undervalued and “an attractive investment opportunity.” Jonathan Soros, a son of investor George Soros, also joined the buying frenzy through JS Capital Management.
The three companies together own about 9% of Anaplan’s outstanding shares, according to the filed documents.
Anaplan competes with legacy software vendors such as IBM, Oracle and SAP. In November, the company reported a slowdown in its billing growth and current remaining performance obligation, prompting Piper Sandler to tell customers the stock’s recovery thesis has “stalled.” Shares fell 15%.
The following month, Corvex representatives spoke with Anaplan’s CEO Frank Calderoni and shared the company’s views on Anaplan’s operations, according to a filing.
Corvex told Anaplan in February that it planned to nominate Meister for election to the Anaplan board. Sachem Head informed Anaplan that it would like to nominate three people. Corvex is one of the most prolific activist companies, according to FactSet, and has launched 28 campaigns to date.
Anaplan did not respond to requests for comment and the company has not yet released a statement about the activists’ efforts.
WATCH: Hightower’s Stephanie Link Says Anaplan Is Ready For Profit
This post Activist investors target cloud providers Anaplan and Everbridge
was original published at “https://www.cnbc.com/2022/03/19/activist-investors-take-aim-at-cloud-vendors-anaplan-and-everbridge.html”
