| Small & micro cap project / Activism insight

First Union: An aggressive micro-cap activist campaign

by | Apr 9, 2020

When top activists like Carl Icahn, Elliott Management, and Starboard Value push their activist agenda, it gains wide media attention. The same cannot be said for micro-cap activist investors. Their efforts mostly go unnoticed.

It is hard to ignore the efforts of Driver management in its proxy campaign against First United Corporation (M.Cap: $94 million).

Driver Management garnered extensive media coverage for its campaign – American Banker, Reuters, S&P Global Market Intelligence, Bloomberg (press release), Institutional Investor, Baltimore Business Journal, Dominion Post, and Activist Monitor.

Most interestingly, Reorg, a website that focuses predominantly on bankruptcy analysis and M&A intelligence, published an article on Driver Management’s proxy campaign effort. Interestingly, three top-15 shareholders, owning 7% in First United, told Reorg they are supporting Driver Management. Even though plenty of activist investors push for M&A, this sort of shareholder survey by a research firm is very rare.

Moreover, Driver Management launched a website to communicate with First Union shareholders. In its website, it releases a series of articles titled “What’s Wrong With This Picture?” The most recent one (February 11, 2020) is very interesting. It is a Q&A-type article that criticizes the family relationship on the board. The article is engaging and witty. Click here to read it.


Driver Management’s efforts are not without any roadblocks.

In January, 2020, the Maryland Office of the Commissioner of Financial Regulation (the “Maryland Commissioner”) initiated an investigation into whether Driver Management should have filed a notice with the state regulator in advance of the fund’s purchase of First United common stock. Subsequently, Driver Management submitted to the Maryland Commissioner a detailed explanation of why it believes that the investigation is not warranted by either fact or law, as the notice requirement was not triggered.

Driver Management points out that Carissa Rodeheaver, chairman and CEO of First United has extensive connections with regulators from her long association with the Maryland Bankers Association. Given the extensive network, Driver management concludes that the company’s leadership or its advisers persuaded the Maryland Commissioner to initiate an investigation based on an obscure, vague and rarely-used statute.

First United offered Driver Management a settlement agreement – an additional board nominee from Driver management and two additional independent nominees.

Driver Management called the settlement agreement an entrenchment technique to isolate one of the driver’s nominee on an eleven-member board.

The fight is not over. Let’s wait and watch.


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