What happened
Shares of toy and game maker Hasbro (HAS 1.14%) rose to close Tuesday up 3.1% after announcing plans to release first-quarter 2022 earnings on Tuesday, April 19.
That announcement wasn't what drove Hasbro stock higher, however.
Image source: Getty Images.
So what
Instead, Hasbro stock seems to have reacted positively to a Yahoo! Finance report released yesterday, which described the latest progress in the company's "battle with its new activist investor Alta Fox Capital."
Alta, you see, has taken a 2.5% stake in Hasbro, and is attempting to leverage its ownership interest into getting Hasbro to give it a seat on the company's board (and is asking the company to create "a capital allocation committee" besides). Hasbro has refused these requests, however.
Management also doesn't seem keen on Alta's suggestion that Hasbro should spin off its Wizards of the Coast (WotC) business unit -- which, according to data from S&P Global Market Intelligence, is Hasbro's strongest performer, growing sales 43% last year. That's 10 points better than the next-best Hasbro business (which is entertainment).
Now what
Alta's stated aim is, of course, "to boost its lagging share price," reports Reuters, and so it might seem strange that investors would cheer a defeat by Alta today. But think about it:
According to Reuters, Alta has praised the leadership of Hasbro CEO Chris Cocks, who was directly responsible for the success of the Wizards of the Coast unit. But if that's the case, then spinning off WotC -- Cocks' baby -- would seem counterintuitive. In case of a successful spinoff, Cocks would likely either leave the company to accompany his favorite division, or stay with Hasbro -- and deprive WotC of his leadership going forward.
Neither of these scenarios sound like a good way to improve shareholder returns for Hasbro. Essentially, Alta is telling Hasbro to "split up the party." Viewed from this context, it makes sense that shareholders would be happy to hear Hasbro will not be following Alta's advice.
