Strong Tone in Activist Investor Letters
/Two recent letters illustrate strong language in persuasive messages to boards of directors:
Blackwells, which owns less than 5% of Peloton, is calling for the board to remove CEO John Foley and to sell the company. A Fortune article provides background, but the letter, as are most activist investor letters, is quite explicit. Jason Aintabi, chief investment officer for Blackwells, cites “multiple leadership failures,” blaming Foley for the company’s decline. With strong language throughout, Aintabi ends the letter with a pun intended, “The ride for Mr. Foley is over. This Board must now independently chart a new path for Peloton.”
Engine Capital wants the Kohl’s board of directors to evaluate the ecommerce business separately and to consider selling the company. The letter comes after a Starboard Value bid to buy the company. The tone of this letter is just as strong as the Blackwells letter about Peloton, but it’s less personal about the CEO. Still, Engine implores the board, “As we will show, there is no excuse for the Board to cling to the status quo.”
Both letters are good examples of tone in context. Of course, investors are not required to be so blatant, but the language is typical—and likely expected—for such demands to be considered credible and to be taken seriously.
