H&R Block
(NYSE:HRB) shareholders are gearing up for this years September 6th
board meeting where they will be faced with a decision whether or not
to vote for incumbent board members or a new slate of three directors
proposed by ex-SEC head Richard Breeden's hedge fund, Breeden Capital
Partners. Shareholders are hoping that these new directors can
implement a series of changes designed to jump the company's stagnant
share price.
Richard Breeden, who owns a 1.8% stake in the
company, has attracted widespread support for his proposal to narrow
the company's focus to just tax preparation services by divesting
everything else. The company's long history of failed diversification
efforts has frustrated many investors and led to a stagnant share price
that has many ready for change. Among other things, Breeden demanded
that the company shut down its thrift division and focus on selling off
its mortgage businesses while focusing on tax preparation services.
Unfortunately,
the poor credit markets might prove to be a hurdle for any move to
divest. H&R Block's current deal to sell its One Mortgage unit to
Cerberus Capital Management was recently delayed until December 31st,
which has many worried that the deal will fall through. Meanwhile, many
other financial and strategic buyers are finding it very difficult to
obtain financing. The company's business units may also prove to be too
small for spin-offs onto the public market.
Shareholders and
analysts seem unphased, however, after three proxy advisory services
recently came out in support of his candidates while other activists
holding a cumulative 15% of the outstanding shares are also expected to
vote in favor of change. Whether or not Breeden is successful remains
to be seen; however, this is definitely a
stock to watch given his past success in activist situations!
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