NEW YORK - In a recent development in the corporate governance dispute at Braemar Hotels & Resorts Inc. (NYSE: BHR), Blackwells Capital LLC, an alternative asset management firm and shareholder of Braemar, has garnered support from Campbell Capital Management (CCM) for its campaign to instigate changes at the company.
The campaign, which includes a push for voting in favor of Blackwells' nominees and proposals, is part of a larger proxy contest aimed at overhauling Braemar's leadership and board.
Blackwells' Chief Investment Officer, Jason Aintabi, criticized Braemar's current chairman, Montgomery Bennett, for what he described as a history of undermining shareholder value and extracting excessive fees through an "Advisory Agreement."
Aintabi claims that this has led to a significant decline in the company's stock price over the past decade. CCM, echoing these concerns, expressed its belief that without structural changes at Braemar, the potential to unlock true shareholder value is slim.
The proxy fight is underscored by Blackwells' accusations of poor governance and conflicts of interest within Braemar's board, which they allege provides cover for Bennett and his father, Archibald Bennett, to profit at the expense of shareholders.
Blackwells has nominated new directors, including Jennifer Hill, former CFO of Bank of America Merrill Lynch (NYSE:BAC), and Betsy McCoy, General Counsel of The Related Group, in an effort to bring fresh oversight to the company.
Blackwells has invited shareholders to review its materials and follow its campaign on social media. The firm has also made it clear that it expects to hold current directors and beneficiaries of the contested Advisory Agreement accountable, and intends to pursue the recovery of funds it deems were improperly taken from Braemar.
The ongoing proxy contest is part of a larger narrative in corporate America where activist investors challenge management and board decisions, advocating for changes they believe will benefit all stakeholders. The outcome of this proxy fight could have implications for governance practices and shareholder rights within the wider hotel and resort industry.
The information in this article is based on a press release statement from Blackwells Capital LLC.
In other recent news, Braemar Hotels & Resorts Inc. has been the focus of significant developments. The company reported a strong start to 2024 with positive Q1 growth, marked by an increase in revenue per available room (RevPAR) and a net income attributable to common stockholders of $3.5 million.
This performance was bolstered by strategic financial actions, including the sale of the Hilton La Jolla Torrey Pines for $165 million and plans for preferred share redemption and common share buybacks.
In parallel, Braemar has been embroiled in a dispute with investor Blackwells Capital LLC. Blackwells has challenged the decisions of Braemar's board and CEO, alleging mismanagement and calling for shareholders to support its nominees and proposals. The investment firm has also filed a lawsuit against Braemar's board, escalating the conflict further.
Amid these developments, analyst firm B.Riley has raised its stock target for Braemar from $2.50 to $3.50, maintaining a Neutral rating. The firm cited Braemar's Q1 performance and strategic actions as influencing factors for the adjustment, while expressing caution due to uncertainties surrounding the company's future plans. These recent developments within Braemar Hotels & Resorts Inc. will be closely monitored by the market.
InvestingPro Insights
In light of the ongoing proxy contest at Braemar Hotels & Resorts Inc. (NYSE: BHR), it is important for investors to consider the company's current financial health and market performance. According to recent data provided by InvestingPro, Braemar's market capitalization stands at 202.12 million USD, reflecting the market's valuation of the company.
Despite the corporate governance issues highlighted, Braemar pays a significant dividend to shareholders, with a dividend yield of 7.22%, as of the last recorded date, which may appeal to income-focused investors.
One of the InvestingPro Tips suggests that Braemar is trading at a low EBITDA valuation multiple, which could indicate that the company is potentially undervalued relative to its earnings before interest, taxes, depreciation, and amortization. This could be a point of interest for value investors looking for opportunities. Moreover, the company's price/book ratio as of the last twelve months is 0.66, which might suggest that the stock is trading below its book value, another signal that could attract value-oriented investors.
While Blackwells Capital LLC has raised concerns about the company's stock performance over the past decade, Braemar has experienced a strong return over the last three months, with a price total return of 42.77%. This recent uptrend could be a sign of changing investor sentiment or a response to the potential for corporate restructuring.
For those interested in a deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/BHR, which provide further insights into Braemar's financials and market performance. Investors can use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a comprehensive set of tips that could inform investment decisions.
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