Disney’s fireworks finale

Hey Superheroes,

A mere week after investors rejoiced at the markets’ best first quarter in years, lower expectations of a rate cut caused markets to shift into the red. Sigh.

But as Kenneth Fisher says: ”time in the market beats timing the market!” Would you agree?

Let’s get on to this week’s stories.

Disney’s long battle reaches its fireworks finale

As if to cap off its stunning first quarter return of ~36%, Disney records another big and highly-important win: the overwhelming support of its shareholders. 

In a proxy battle that spanned almost two years against activist investor Nelson Peltz, 94% of shareholders voted in favour of board members backed by Disney’s leadership. That’s an overwhelming majority.

⚔️ Proxy battle?

Proxy battles are often initiated by dissatisfied shareholders with the goal of influencing the decision-making power of a company. This can involve persuading other shareholders to use their voting power (a power most share types will have) to vote in favour of the activists’ goals. 

In Disney’s situation, activist Nelson Peltz was aiming to gain two seats in Disney’s board of directors. 

Peltz is the founder of Trian Fund Management, which owns a roughly 2% stake in Disney. He’s also a renowned activist investor who has won board seats at Heinz, Mondelez and Procter & Gamble.

👀 Nelson’s side of things

While the term “activist” may raise eyebrows, it’s not necessarily a bad thing. Having activist investors can drive underperforming companies to work harder to improve performance for example. 

Peltz publicly announced criticism of Disney’s performance in January 2023 – at a time where Disney’s share price was down over 50% from its 2021 peak. At the same time, he announced his intention to take a seat on Disney’s board in order to drive better performance. 

According to Peltz, Disney was doing several things wrong: it failed at implementing a strong succession plan when Bob Iger first retired in 2020, it continued to sit still while its streaming business bled out money and – perhaps his biggest point – it was too “woke.” 

He stated that Disney’s recent focus on inclusivity and diversity was taking away from what the main goal of its happy endings should be: entertainment. Whether it contributed to it or not, Disney’s share price had soared every time Peltz declared war. Or was it because Disney’s board felt the pressure to perform?

🚵 The rollercoaster isn’t over

While the proxy battle’s end has finally given Disney a chance to breathe, analysts believe that the real fight is far from over – Disney+ still isn’t profitable, its blockbuster franchises, Marvel and Star Wars, seem to have lost steam and its latest earnings are far from its peak. Some even say that Disney is trying to do too much with its latest foray into gaming.

However, long-time CEO Bob Iger states that he has a long-term plan to bring Disney back into its former spotlight. The first of that apparently being a Disney+ password-sharing crackdown. 

Perhaps after six failed attempts at retiring, Bob Iger can finally see a happy ending to his long-time career.

🔦  Some other things we’re shining the Spotlight on:

• SPOTIFY TO AMPLIFY: Spotify is apparently planning to increase monthly subscription prices in Australia by $1-$2 later this month – less than a year after its last one in July. The price change is expected to mainly affect audiobook listeners with a higher monthly fee required for its access. 
• BLINK AND YOU’LL MISS IT: Blinklab, an AI-powered healthcare tools developer, debuted on the ASX this Thursday. The company’s flagship product is its smartphone-based test that seeks to allow early detection of neurodevelopmental conditions such as autism and ADHD. Blinklab (ASX:BB1) is now available on Superhero.
• NOVONIX ADDS TO ITS MIX: Novonix (ASX: NVX) and Lithium Energy (ASX: LEL) have inked a merger deal, pooling their adjoining Queensland graphite projects to birth a new entity named Axon Graphite. The merger aims to establish a vertically integrated battery material production company set to undertake its own IPO once formed.

That’s all for this week’s Spotlight! 

Keep up to date with market news and insights by following us on Instagram, @superheroau! Happy Easter, everyone!