Activist shareholders can distract management from focusing on growth and cash flow, and maybe Brookdale and Capital Senior Living can move forward in peace.
Don’t you just hate distractions. Andy Smith at Brookdale has had to deal with a bunch of activist shareholders for the past year while trying to right his ship. Larry Cohen of Capital Senior Living had his activist several years ago, who then went on his board and became aligned with management’s goals. In round two this year, he has come to agreement with another one, Lucas Advisors, known by some as the trust fund baby hedge fund. Capital has agreed to appoint a new independent Board member, consulting with Lucas on the appointment, and Lucas can propose up to two candidates for the one spot. In return, Lucas agreed to vote for the slate of directors and has agreed to a Standstill Agreement. This is all good news, because the company can focus on occupancy, cash flow and growth without having to watch its back every time it sneezes. And talking about sneezing, with the modest flu season coming to an end, which last year was blamed by many for poor occupancy trends, we are assuming that the large companies will be reporting better than expected census numbers for the first quarter. And, with a warm winter, those heating and snow plow bills will be much lower. No excuses this time.
