Hologic Inc. (HOLX): Activist Icahn Trims Position; Engaged Capital Intensifies Proxy Fight with Benchmark Electronics Inc. (BHE) & Other Smart Money Moves

In a Proxy Statement filed with the SEC, Glenn W. Welling’s Engaged Capital LLC urges shareholders of Benchmark Electronics Inc. (NYSE:BHE) to support the election of the fund’s three nominees at the company’s annual meeting of shareholders that is scheduled to take place in May. The filing said that Engaged Capital is “concerned that the Board is not taking the appropriate action to execute upon the opportunities that we believe are available to drive shareholder value”. Mr. Welling’s investment firm, which owns 2.44 million shares of the provider of integrated manufacturing, design and engineering services and product life cycle solutions, believes that Benchmark’s shares are deeply undervalued, as well as reckons that the Board’s “undisciplined approach to capital allocation demonstrates its inability or unwillingness to be an effective steward of shareholder capital”.

In November 2015, Benchmark Electronics Inc. (NYSE:BHE) acquired Secure Communication Systems. a provider of customized electronics, sub-systems, and component solutions, for $230 million, a move that had been strongly discouraged by Engaged Capital. The recent filing said that the company’s freshly-completed acquisition of Secure “has only heightened our concern regarding the Board’s approach to capital allocation”. Moreover, Mr. Welling and his team believe that companies operating in the electronics manufacturing services (EMS) industry, including Benchmark Electronics, are well-positioned to experience improving valuations in the upcoming years. In a fresh statement released by Benchmark, the company urges shareholders to vote its current slate of Directors at the upcoming meeting of shareholders, saying that “Engaged Capital’s nominees, if elected, will seek to advance Engaged Capital’s short-sighted interests based on fundamentally flawed and misguided analysis ahead of the best interests of all shareholders”. A total number of 20 money managers from our database were invested in Benchmark at the end of December 2015, accumulating almost 13% of its outstanding shares. Royce & Associates, founded by Chuck Royce, trimmed its stake in Benchmark Electronics Inc. (NYSE:BHE) by 59% during the October-to-December period, ending 2015 with 2.43 million shares.

Disclosure: None