HoldCo Asset Management and its managed funds (collectively, “HoldCo”) own 677,769 shares of common stock of Universal Corporation (“Universal”, “UVV”), approximately 2.7% of its outstanding shares. On May 23, 2018, Universal announced, in part, that it was increasing its dividend by 36% and that it remained committed to its historical strategy of increasing the dividend every year (as has been the case for an impressive 47 consecutive years), that it had repurchased a significant amount of common stock during its fourth fiscal quarter, and that it expects to continue to return excess capital to shareholders through future share repurchases (collectively, the “Announcements”).
HoldCo applauds these recent actions taken by UVV which satisfactorily address the most significant concerns raised by HoldCo in a draft presentation provided to senior management three months ago and a final version of the presentation (the “Presentation”) provided to the board of directors two months ago. The Presentation, sent to the board of directors on March 29, 2018, conveyed HoldCo’s view that the market price for UVV’s common stock reflected an extreme undervaluation driven by four fixable problems, including those related to capital allocation, investor engagement, management and board incentives, and board oversight. In this same presentation, HoldCo proposed numerous actions to address these problems (the most important of which was a commitment by Universal to return all free cash flow to shareholders), stated its desire to reach a mutually agreeable resolution with the board, and stated that absent such a resolution HoldCo intended to nominate three directors to Universal’s board at the 2018 annual meeting. A copy of the Presentation, parts of which have been redacted in the spirit of sensitivity and goodwill towards management and the board of Universal, and which has not been updated to account for recent developments, can be found at the following link:
“Universal’s recent announcements demonstrate that management and the board are willing to listen to its shareholders and do the right thing, and it is no surprise to us that these announcements have already been embraced by the marketplace. While management still has more levers to pull as detailed in our presentation, this is a big step in the right direction,” said Misha Zaitzeff, a member of HoldCo’s general partner. Added Vik Ghei, also a member of HoldCo’s general partner, “In light of these positive announcements, HoldCo has determined that it will not launch a proxy contest at Universal’s 2018 annual shareholder meeting.”
A simplified timeline of relevant events detailing HoldCo’s involvement with Universal is provided below:
Beginning in late 2017, HoldCo’s flagship fund began purchasing shares of Universal’s common stock.
Following its purchase, HoldCo had multiple phone calls (and written exchanges) with Universal.
On March 1, 2018, four HoldCo representatives met with certain members of Universal’s senior management team in Virginia and walked Universal through a draft presentation detailing its concerns and suggestions regarding Universal.
On March 29, 2018, HoldCo sent the Presentation to Universal’s board of directors.
On May 16, 2018, four HoldCo representatives met with two members of the board of directors in JP Morgan’s offices in New York.
On May 17, 2018, HoldCo was contacted by JP Morgan’s Head of Shareholder Activism Defense, who had been retained by Universal.
On May 23, 2018, Universal made the Announcements (as described above).
On May 28, 2018, HoldCo notified Universal that, in light of Universal’s Announcements, it had determined not to nominate directors to Universal’s board at the 2018 annual meeting.
About HoldCo Asset Management
HoldCo Asset Management is an investment adviser located in New York City. HoldCo was founded by Vik Ghei and Misha Zaitzeff. HoldCo and its affiliates currently have approximately $900 million in regulatory assets under management. With respect to Universal, HoldCo is utilizing the services of the law firm Thompson Hine LLP.
This press release, or the Presentation, is not a solicitation of authority to vote your proxy at any meeting of Universal or otherwise. Please do not send us a proxy card as it will not be accepted or voted.
As of the publication date of this document and link to the Presentation, HoldCo has a long position in the common stock of the company referenced herein. HoldCo will profit if the price of Universal’s common stock increases. HoldCo may change its views about its investment position in Universal at any time, for any reason or no reason, and at any time may change the form or substance of any of its investment positions in Universal. If it does so, it will not be under obligation to inform anyone. HoldCo is under no obligation to maintain its existing investment position in Universal and is free to purchase additional common shares or sell a portion or the entirety of its common shares in Universal at any time and without informing anyone.
All content in this document represents the opinions of HoldCo as of the date of its publication. HoldCo has obtained all information herein from publicly available sources it believes to be accurate and reliable. However, such information is presented “as is,” without warranty of any kind whether express or implied.
All content of the referenced Presentation represent the opinions of HoldCo solely on the date (March 29, 2018) that the Presentation was provided to Universal’s board of directors (such date, the “Presentation Date”). HoldCo’s opinions may have changed following the Presentation Date and may today be substantially different than those expressed in the Presentation. HoldCo stresses that the Presentation was an imperfect but genuine effort to piece together public information to formulate answers to some of the most pressing questions that it had about Universal. In addition, HoldCo stresses that many facts (and the resultant conclusions) in the Presentation have changed since the Presentation Date including the fact that following the Announcements, Universal’s stock price has appreciated substantially and prices of securities that are compared to Universal in the presentation have also experienced material changes (and in certain cases, material declines). HoldCo obtained all information in the Presentation from publicly available sources on or around the Presentation Date they believed to be accurate and reliable and presented the data through various calculations and illustrations as it felt appropriate on the Presentation Date. However, such information is presented “as is,” without warranty of any kind whether express or implied, and Presentation may have errors.
This document is for informational purposes only and is not intended as an official confirmation of any transaction. All data and other information are not warranted as to completeness or accuracy and reflect HoldCo’s views as of this date (or in the case of the Presentation, as of the Presentation Date), all of which are accordingly subject to change without notice.
This document and referenced Presentation do not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
HoldCo reserves all rights that it may against Universal, its subsidiaries, its affiliates and its representatives.
The information contained in this document (or in the Presentation) may include, or incorporate by reference, forward-looking statements, which would include any statements that are not statements of historical fact. These forward-looking statements may turn out to be wrong and can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, most of which are beyond HoldCo’s control.
HoldCo and its employees are not tax lawyers or accountants and nothing stated herein should be used or relied upon without consultation with your advisors including tax lawyers and tax accountants.