| Small & micro cap project / Activism insight
Wynnefield’s rare proxy campaign: MVC Capital
On April 21, 2020, Wynnefield launched a proxy campaign at MVC Capital. It is seeking three out of the total of nine board seats. Notably, one of the fund’s nominees, Arthur D. Lipson, is also a long-term shareholder of MVC Capital.
Why is this interesting?
Established in 1992, Wynnefield was founded by Nelson Obus and Joshua Landes. The fund follows the value investing philosophy and takes a long-term view. As a matter of fact, the fund has held stakes in a few companies for more than a decade!
The fund typically does not invest with the intention of influencing a company. Nevertheless, the fund does not shy away from expressing its blunt opinion.
At the same time, a proxy campaign is rare. In fact, in its 28-year history, it launched a proxy campaign at only six companies. We refer to proxy campaigns as the one where Wynnefield files a non-management proxy filing.
Three notable things:
First, the fund launched a proxy campaign after 3.6 years of silence.
Secondly, the fund has owned a stake in MVC Capital for more than five years. So, it is not a typical “hit and run” scenario.
Thirdly, MVC Capital is the fund’s 4th largest position, accounting for roughly 9% of the total portfolio. So, Wynnefield is highly motivated to improve shareholder value.
We would hope that these actions include an independent review of strategic alternatives, primarily a potential merger of MVC with another business development company to achieve necessary scale, paving the way for lower operating expenses and higher dividends.” – Nelson Obus, President, Wynnefield Capital
Let’s wait and watch.
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