An activist hedge fund with a 7.2% ownership stake in Envestnet Inc. is preparing a proxy fight to try and gain some say over the direction of the provider of technology and software to financial advisers.
Impactive Capital, a $2.7 billion hedge fund, issued a press release Tuesday detailing dissatisfaction with Envestnet’s stock price performance and explained that Impactive is trying to secure a seat on the platform’s board of directors.
The Impactive press release includes a copy of a letter sent on Tuesday to Envestnet’s board of directors that focuses largely on Envestnet’s stock price performance under chairman James Fox’s tenure beginning in February 2015.
According to the letter, during the period Fox has been on the board, Envestnet’s stock has underperformed the S&P 500 Index by 124%.
Over the period Envestnet’s stock declined by 2.6%, while the S&P gained 121.2%.
Over the past five years through Nov. 10, Envestnet’s stock gained 1.8% while the index gained 67.3%. And over the trailing 12 months, Envestnet shares lost 37.3% while the index lost 13.3%.
Measured against the performance of a proxy of peer group firms, Envestnet’s stock did even worse, according to data compiled by Impactive.
During the period of Fox’s tenure on the board, the peer group proxy gained 240%; it gained 115.3% over the five-year period and lost 12.4% over the past 12 months.
“We write today because we are exceedingly troubled by the Company’s long-term underperformance, lack of shareholder alignment, poor Board governance, and disingenuous shareholder engagement,” the Impactive letter reads in part.
“Absent the appointment of an Impactive representative to the Board, we see no choice but to consider nominating a slate of directors at the next annual meeting of shareholders to replace long-standing directors who must be held accountable for the Company’s subpar performance,” the letter states.
Envestnet responded to a request for comment for this story with the following statement: “The Envestnet Board of Directors and management team are focused on creating value for shareholders by executing our strategy to accelerate growth, and we will continue to take actions to achieve these objectives. As always, we welcome input from our investors with the common goal of driving shareholder value.”
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