Please ensure Javascript is enabled for purposes of website accessibility

Activist Investors Say Recent GameStop Board Changes Are Still Not Enough

By James Brumley - Mar 12, 2020 at 2:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Permit Capital and Hestia Capital continue to argue shareholders aren't adequately included in the company's oversight.

Struggling video game retailer GameStop (GME -2.67%) revealed plans to change up its board of directors earlier this week. Permit Capital Enterprise Fund LP and Hestia Capital Partners LP, however, still contend the board needs better representation from bigger stakeholders.

Permit's John Broderick and Hestia's Kurtis Wolf argued in a letter made public on Thursday, "If we cannot convince the Board that adding a representative of a large stockholder is valuable, we are prepared to nominate candidates for election to the Board at this year's annual meeting."

Office workers meet around a long boardroom table.

Image source: Getty Images.

The message is the latest chapter in a saga that began last February, when Hestia first urged the company to improve efficiency and lower its administrative and selling costs. Even by that time GameStop was clearly struggling. Sales and profits peaked in 2011 when downloaded games, rather than disk or cartridge-based games started to become the norm. The company had mulled the idea of selling itself to a partner capable of helping it adapt to the industry's paradigm shift, but discontinued that effort, opting to turn itself around on its own. On the same February day GameStop made that announcement, Hestia penned its letter asking for those improvements.

It wasn't the last letter Hestia's Kurtis Wolf would write. He and Broderick made several more requests in the meantime, prompting GameStop to request certain communications from the pair of shareholders not be publicly disclosed. That privacy agreement expired today, three days after GameStop named three new board members, and announced the impending exit of six current board members. 

James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GameStop Corp. Stock Quote
GameStop Corp.
$39.45 (-2.67%) $-1.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.