Activist company

Walt Disney Company shares scooped up by hedge fund from activist investor Daniel Loeb

Third Point Management, the hedge fund led by activist investor Daniel Loeb, disclosed the purchase of up to $1 billion in The Walt Disney Company (NYSE:DIS) in a public letter to Disney CEO , Robert Chapak.

The roughly 0.4% stake isn’t Disney’s first investment for Third Point, having bought roughly US$150 million worth of stock during the volatile early 2020 period, even as issues pandemics were happening and Disney was dealing with the departure of a long-term company. chef Robert Iger.

Loeb has a reputation for buying struggling companies in a bid to turn them around, but in a letter to Disney boss Robert Chapek, he sounded optimistic about the multinational entertainment conglomerate’s prospects.

“The results for this quarter are important evidence that Disney’s complex transformation is succeeding and such is our confidence in Disney’s current trajectory that we have, in recent weeks, repurchased a significant stake in the company,” Loeb wrote in a statement. letter to the director of Disney, Robert Chapeck.

Disney is also waging the streaming wars, with its main service Disney+ adding 14.4 million subscribers in the third quarter while Netflix saw a reduction.

Changes on the horizon for Disney?

But a range of changes have also been proposed, including an exclusion from cable sports channel ESPN, share buybacks, debt reduction and cost-cutting exercises.

Regarding ESPN, Loeb asserted that despite the channel generating significant cash flow, “we believe it is arguable that the ESPN business should be transferred to shareholders with appropriate leverage which will reduce leverage at (Disney)”.

Loeb wrote to Chapek that Disney’s board needs to be refreshed due to “gaps of talent and experience as a group that need to be filled”.

Loeb’s checklist also includes accelerating the acquisition of Disney’s remaining stake in Hulu from Comcast (NASDAQ:CMCSA) to integrate the streaming service into Disney+ to streamline operating expenses.

Year-to-date, NYSE-listed DIS shares have fallen 21%.