Blackwells Capital accused Walt Disney of failing to disclose that ValueAct Capital Management had invested over $350 million of the U.S. entertainment giant’s pension fund assets.
According to Blackwell Chief Investment Officer Jason Aintabi, “ValueAct’s management of Disney’s pension funds is not disclosed anywhere in any of the referenced communications.”
Disney had completely withdrawn its investment in ValueAct, and the firm was no longer managing any money for the company when it acquired its stake in Disney last year, as per a source familiar with ValueAct’s business.
A ValueAct representative chose not to confirm any details regarding the firm’s current or past clients. ValueAct initiated its investment in Disney late last year and entered into an information-sharing agreement in January to provide advice on strategic matters to Disney.
Last week, ValueAct publicly backed the Disney board during the Council of Institutional Investors conference.
Disney is leveraging ValueAct’s support while contending with two other activist investors, Blackwells and Trian Fund Management, both vying for seats on the Disney board.
Disney did not immediately respond to requests for comment. Similar to many hedge funds, both ValueAct and Trian generate fees by investing capital on behalf of large corporations.
Disney announced on Monday that it terminated Trian in 2021 due to poor performance. However, the company did not disclose in its proxy materials which other firms have previously managed or are currently managing money for its pension fund.
Blackwells referred to Disney’s form 5500, filed with the Department of Labor, as the source of information regarding the management firms Disney engages.
Lack of Disclosure Raises Questions
Blackwells Capital’s accusation against Walt Disney for failure to disclose ValueAct Capital Management’s significant investment in its pension fund assets raises serious questions about transparency and shareholder communication within the company.
The revelation by Blackwell Chief Investment Officer Jason Aintabi underscores the importance of clear and comprehensive disclosure in corporate dealings.
The involvement of multiple activist investors, including Blackwells and Trian Fund Management, in Disney’s affairs signifies the challenges faced by the company in maintaining control over its strategic decisions and board composition.
The support extended by ValueAct to the Disney board amidst these activist pressures highlights the complexity of corporate governance dynamics in large corporations like Disney.
Corporate Governance Under Scrutiny
Disney’s handling of its investment relationships, the termination of Trian for poor performance, and the broader context of activist investor involvement raise broader questions about corporate governance practices within the company.
The reliance on hedge funds for capital management and the implications of such arrangements on shareholder value and transparency warrant closer examination from regulators and stakeholders alike.
