An Activist Fund Enters, and Why We Bought it Into the Portfolio

This morning, it was disclosed that Alta Fox Capital, the activist fund from Texas with a previous history in Nordic public companies, has taken a 0.79% stake in Asmodee worth around SEK 306m.

It’s always worth taking note when a known activist enters the shareholder list, so we did a rundown of previously known campaigns to better understand which playbook they may be using on Asmodee.

In general, Alta Fox seems to do two kinds of investments: activist campaigns where they actually proposed change and financial ones where they lay out their thesis in public reports on why an investment is attractive. Given the current state of Asmodee (strong momentum), position size (sub-2%), and TCG angle (like Hasbro), we think this will be a financial investment. Given that, it’s quite likely that they will lay out a public research report when they are done with the buying.

The most common demand from Alta relates to capital allocation demands like pressing for buybacks, dividends, or reallocation of internal investments. It’s not uncommon for them to try and block sales, or propose divestments. A target is usually ripe for a deal when the share price has underperformed, there's questionable M&A, or assets are being sold. For Asmodee, none of that fits. Since the spin-off, the share price has performed well; they are executing on an accelerated M&A agenda, showing step-growth uptake plus margin expansion. To us, that does not look like either a mismanaged or misunderstood target that usually fits an activist campaign.

In this post, we also outline our reasons for initiating a starter position in Asmodee.

Alta Fox’s most notable campaign was on Hasbro in 2022…

Disclaimer

Not investment advice, for informational purposes only. The company discussed, Asmodee, is a holding in our public portfolio.