Founded in 1996, Cannell Capital is a Wyoming-based hedge fund manager by Carlo Cannell, a former analyst at San Francisco-based investment bank, Dakin Securities. The firm typically invests in stocks of small-cap companies, employing a market neutral approach to make its investments.
Carlo Cannell
Cannell Capital was founded by Carlo Cannell in 1992 with an initial out-of-pocket investment of just $600,000. The San Francisco, CA based fund is an employee-owned long/short market neutral equity hedge fund. The firm primarily invests in stocks of domestic small-cap companies by using a value-oriented, bottom-up, market neutral approach to make its investments. In 2004, when funds under management had grown to $765 million, the fund returned 15% of the capital to its investors. Mr. Cannell’s logic was simple yet incisive, citing that the mortality rate of hedge funds with an AUM of $1 billion or more was high and that he would rather “practice prudence over greed.” Recently, Carlo has become an activist investor by taking on Jim Cramer and The Street.com by demanding a pay cut for Mr. Cramer or a sale of the company.
Letters & Presentations
Active 13D Positions
Past Activist
1847 Goedeker Inc (GOED)
On September 23, 2021, Cannell Capital stated that it has studied the September 9, 2021 proposal of Kanen Wealth Management, LLC (“KWM”) for the Board of Directors. Cannell Capital considers most of the KWM candidates to be superior to those of GOED. Accordingly, Cannell Capital neither consents, nor approves of GOED allocating any cash (cash which rightfully and legally belongs to Cannell Capital and other shareholders) to defend its position. Cannell Capital calls on GOED to immediately reach a fair and reasonable settlement with KWM
ContextLogic Inc (WISH)
In 2023, Cannell Capital took active measures to address concerns about the company’s poor performance since its 2020 IPO, which led to an $18.2 billion market value decline and significant cash flow losses. On September 19, Cannell called for a strategic review, urging the cessation of operations and a return of cash to shareholders, warning of forming a Concerned WISH Shareholder Group if necessary. On September 28, it launched "Rescue WISH" to support shareholders, criticizing the board for optimistic guidance, insider stock sales, and failing to protect $531 million in shareholder assets. On October 10, Rescue WISH called for selling unprofitable businesses and returning cash to shareholders. By November 11, Rescue WISH criticized the board for inaction and raised concerns about governance and board affiliations.
Destination XL Group (DXLG)
On May 7, 2018, Cannell Capital nominated four candidates for the board at the 2018 Annual Meeting. On June 11, 2018, the company agreed to appoint one of Cannell's nominees to the board, leading Cannell to withdraw its nominations and support the company's proposals. On January 29, 2020, Cannell criticized the board and proposed the resignation of three members, intending to withhold votes if they remained. By July 29, 2020, Cannell decreased its stake to 4.51%.
Digirad Corp (DRAD)
On April 26, 2018, Cannell Capital (10.76%) disclosed advocating for improved management of officers, assets (especially owned and leased real estate), and SG&A expenses during communications with the Board on April 23, 2018. By September 11, 2018, Cannell trimmed its stake to 10.7% and entered into a put option and standstill agreement with Jeffrey E. Eberwein of Lone Star.
EMCORE Corporation (EMKR)
In 2022, Cannell Capital actively engaged with the company, disclosing a 9.98% stake on April 11 and requesting the immediate replacement of two board members. On August 3, Cannell sent another letter to the Board, criticizing EMKR's leadership and governance. It highlighted concerns about the CEO’s inability to attract or retain talent, management missing earnings estimates in three of the last six quarters, a disengaged board with minimal capital allocation expertise and limited personal investment, and structural conflicts deterring external parties from significant ownership or control.
Evine Live Inc (EVLV)
On December 3, 2015, Cannell Capital (8.07%) sent a letter to the company's CEO, urging a share buyback of at least 15% through a single price tender or a Dutch Auction at $1.95–$2.10, and recommending the appointment of Charles M. Gillman to the board. Cannell highlighted QVC's acquisition of Zulily at 1.9x sales and 38x EBITDA as a precedent, suggesting a similar valuation for EVLV could imply a share price of $22, a 1,150% increase from the current $1.95. By November 2, 2016, Cannell reduced its stake to 4.17%.
Health Insurance Innovations, Inc. (HIIQ)
Between 2017 and 2019, Cannell Capital actively engaged with Health Insurance Innovations, Inc. On November 3, 2017, Cannell disclosed an 8.1% stake, advocating for an additional board member. On December 14, 2017, the company entered into an agreement with Cannell, expanding the board to eight members and appointing John Fichthorn, who was later nominated for re-election at the 2018 Annual Meeting. On January 8, 2019, Cannell (5.4%) proposed Patrick McNamee, former CEO of HIIQ, for board candidacy. On April 17, 2019, Cannell commended the company’s progress and recommended focusing on compliance, expanding digital B2C distribution, and collaborating with carriers to diversify policies beyond STM.
Hooper Holmes Inc (HH)
In October 2013, Cannell Capital disclosed a 14.24% stake and sent a letter to the board expressing concerns about excessive director compensation and suggesting "going-dark" to reduce costs. By September 22, 2016, Cannell had reduced its ownership stake to 3.81%.
Hudson Global, Inc (HSON)
In early 2019, Cannell Capital (7.3%) engaged with the company, reserving the right on January 14 to discuss various matters, including board representation. On February 25, it nominated five candidates for election to the board at the 2019 annual meeting. However, at the AGM on May 6, 2019, shareholders elected the incumbent board nominees.
Rightside Group, Ltd. (NAME)
In 2016-2017, Cannell Capital actively engaged with the company. On March 1, 2016, it disclosed a 7.32% stake and, in a February 19 letter, proposed unifying products under the eNom.com brand, terminating weaker staff, consolidating offices, upgrading eNom.com infrastructure, refinancing debt, and adding two new board members. By February 14, 2017, Cannell increased its stake to 8.78% but announced on April 20 that it would vote against all incumbent directors at the June 2, 2017 AGM. Despite this, 88% of shareholders supported the incumbents, who were re-elected. On July 11, 2017, Cannell reduced its stake to 6.17%.
Servicesource International, Inc. (SREV)
On April 2, 2019, Cannell Capital (6.75%) urged the company to explore a sale, citing its enterprise value at just 0.83 times trailing 12-month gross profit, an attractive valuation for financial and strategic buyers. Cannell also warned that it would seek board representation if the company failed to initiate a sale process.
Spark Networks Inc (LOV)
In 2021, Cannell Capital increased pressure on the company to address its performance gap. On April 21, holding a 5.66% stake, Cannell demanded the addition of Charles M. Gillman to the board during a call with Chairman David Khalil. By May 24, with a 6.11% stake, Cannell expanded its request to include Gus D. Halas and Michael Margolies as board replacements, citing the board and management's inability to close the gap between the company's market and economic value. Cannell also supported the "Save Spark Networks" campaign, launched on May 13, 2021, via the website savesparknetworks.com.
TheStreet, Inc. (TST)
In 2017-2018, Cannell Capital actively engaged with TheStreet, Inc. On April 3, 2017, holding a 9.48% stake, Cannell disclosed a letter to the Chairman seeking board representation. On April 20, it announced plans to vote against two incumbent directors at the May 31 AGM and, on May 23, issued a presentation titled "Governance Issues at TheStreet, Inc." Despite this, all incumbent directors were re-elected at the AGM. Cannell subsequently reduced its stake to 8.27% on August 1, 2017, and further to 7.93% on October 16, 2018.
United Online Inc (UNTD)
In 2015-2016, Cannell Capital actively engaged with United Online, Inc. On November 12, 2015, holding a 4.82% stake, Cannell announced plans to nominate directors to the board. On May 4, 2016, United Online entered into a merger agreement with B. Riley Financial, Inc. and Unify Merger Sub, Inc. However, on June 17, 2016, Cannell announced its opposition to the proposed merger.
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