Hedge fund takes aim at Las Vegas company led by Golden Knights owner Bill Foley

An East Coast hedge fund has taken aim at a holding company led by Golden Knights owner Bill Foley, saying “dramatic change” is needed amid a slumping stock price and “egregious” corporate governance.

Carronade Capital Management said in a letter last week that it owns around 2.9 million shares in Las Vegas-based Cannae Holdings and that the company, which buys stakes in operating businesses, should slash costs, improve capital allocation and establish corporate accountability with “truly independent directors.”

The Connecticut-based investment firm, which boasts more than $2.2 billion in assets under management, nominated four new members for Cannae’s board, arguing that Cannae’s shareholders are seeing underperforming returns and that the board has a “high degree of interconnectedness.”

Cannae’s stock price closed Thursday at $18.84, down almost 59 percent from early 2021.

The hedge fund also said it was shocked by the board’s recent “egregious actions” to, in part, require the buyback of half of Foley’s shares at a premium to market prices, on top of his “already rich compensation package” if he invokes his right to resign if a single director is elected without his consent.

Foley is chairman, CEO and chief investment officer of Cannae and one of its biggest shareholders.

“If meaningful changes are not enacted, we are prepared to take our case to shareholders so that they have the opportunity to vote for directors who they believe will best prioritize their interests and ensure accountability in the boardroom,” wrote Carronade managing partner Dan Gropper and partner Andy Taylor.

Cannae issued a response the same day, saying it has already taken significant steps for long-term value creation.

The firm said its strategy, launched just over a year ago, includes returning capital to shareholders, rebalancing its investment portfolio toward private companies with cash flow, and improving its portfolio companies’ operations.

“We have made strong progress across all three areas of focus,” Cannae said, adding it believes its strategy will “deliver better long-term returns to our shareholders” than the moves proposed by Carronade.

Cannae said it has repurchased around 35 percent of its stock since spring 2021, returning $738 million to investors, and raised about $470 million over the last year through portfolio stock sales.

Foley, whose net worth is $2.8 billion, according to Forbes magazine, is the longtime chairman of real estate transaction-services giant Fidelity National Financial, which Cannae was split off from in 2017.

Contact Eli Segall at esegall@reviewjournal.com.