Investor beef
Showdown at Outback Steakhouse
Good morning, chuck-roast connoisseurs. This is your Stock Market Rundown for January 26th, 2024. Thank you for joining me. Let’s dig in:
TODAY’S TOP STORY: BLOOMIN’ BOARDROOM BATTLE
The iconic deep-fried jumbo-onion appetizer was invented in the USA by Outback co-founder Tim Gannon. In fact, none of the founders of Outback had even been to Australia when they launched the brand in 1986. They just picked the concept because Crocodile Dundee had been a recent hit in theaters.
Outback, along with other franchises like Bonefish Grill and Carrabba’s, is owned by a holding company called Bloomin’ Brands. And right now, they’ve got an activist investor named Starboard Capital looking over their menu.
Quick primer on activist investors: they buy stakes in public companies, then lobby for changes that will increase the stock price. For example, back in 2014 Starboard led an activist campaign against Olive Garden that resulted in that chain’s entire board being replaced. (One of Starboard’s key complaints: Olive Garden didn’t salt their pasta water. How the hell are you making pasta in unsalted water?!)
Now, Starboard has decided Outback Steakhouse is their next meaty target. In a confrontational slide presentation, Starboard praised Outback as an “iconic concept”, and the Bloomin’ Onion as an “American staple”. But they pointed out that the stock trades at a discount to peers because of slovenly service and food that tastes like it came out of a microwave. Recommended fix: replace the board, just like they did at Olive Garden.
After months of negotiation, the two sides reached a compromise: Bloomin’ agreed to appoint two new board members recommended by Starboard. Now, they’ve got to cook up an operational turnaround in the next few quarters… otherwise, it’ll be back to the chopping block.
SO WHAT ELSE IS GOING ON?
Bentley, the vehicle brand most likely to be driven by the owner’s butler, reported a double-digit sales decline in 2023. Fun fact: every Bentley comes with a jar of Grey Poupon in the glove compartment.
Morgan Stanley chairman James Gorman must be smiling like Vin Diesel at an illegal drag race. His total pay last year was $37 million, the highest disclosed for a US bank exec this year so far.
Sam Altman, the CEO of top artificial intelligence company OpenAI, is setting up a billion-dollar network of factories to manufacture the semiconductors that power AI applications. Nice, vertical integration… this is like Ikea planting forests, or Ford opening its own steel mill.
Experts expect US solar power capacity to surge 75% in the next two years. I assume most of it will be in sunbelt states… not sure who’s going to invest in a solar farm in Wisconsin.
Bitcoin mining company Core Scientific’s bankruptcy restructuring has been approved. First bankruptcy I’ve heard of where the liability that tipped them over the edge was a $7 million unpaid energy bill. Maybe try putting some solar panels on the roof?
Clocking out for the week, comrades; have yourselves a fabulous weekend, and I’ll see you bright and early Monday morning. Yours in capitalism, The Axe