Forestar Group Inc. (FOR) Board Gets Shakeup Following Pressure From SpringOwl, Cove Street

The investor group sent an open letter to shareholders of the real estate company on January 6, expressing disappointment in the under-performance of the company and its stock, which had lost 25.57% in 2014, and is down another 9.16% so far in 2015. They blamed the poor performance on a number of factors, including initiatives that were too distant and unfocused to have any great meaning, as well as numerous cases of questionable corporate governance that resulted in a great loss of value to shareholders, including several poor Capital Allocation decisions.

By the end of January, Forestar Group Inc. (NYSE:FOR) began to act under the mounting activist pressure to curb their oil and gas expenses, announcing that they would close their North Texas oil and gas operations office in Fort Worth, in an effort to cut costs, before announcing their agreement with the investor group yesterday. In addition to the appointment of Silvers, Forestar will also appoint David Weinstein to the Board, a former president and CEO of MPG Office Trust Inc. As well, current board members Carl A. Thomason and Michael E. Dougherty will resign and retire from the board respectively; immediately in the former’s case, and in the latter’s, by the May, 2016 shareholder meeting. As part of the agreement, the investor group will vote for all of the board candidates put forth by the company, as well as unspecified proposals that may be put forth by the next shareholder meeting.

“Forestar’s Board of Directors and management team are fully engaged in exploring strategic alternatives to enhance shareholder value, including a thorough review and evaluation of the oil and gas business. We believe the addition of Mr. Silvers and Mr. Weinstein will provide additional perspectives in evaluating our strategic alternatives, and we look forward to working together to maximize long-term value for all shareholders” said Jim DeCosmo, President and Chief Executive Officer of Forestar.

Geoffrey Raynor’s Q Investments and Steve Pei’s Gratia Capital were the two largest shareholders in Forestar Group Inc. (NYSE:FOR) among institutional investors we track, as of September 30. Q Investments held 555,122 shares, while Gratia Capital owned 509,131.

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