Shares of Peloton (NASDAQ:PTON) are in the green today despite a newly released report from Blackwells Capital. Blackwells currently owns a less than 5% stake in the at-home fitness company. The 71-page report states that Peloton has not made much progress since Barry McCarthy took over as CEO and that the company should pursue a sale to an acquirer. Since the beginning of the year, PTON stock has declined by 29%.
PTON Stock: Blackwells Calls For Change
The report starts off by addressing McCarthy’s short tenure as CEO: “Two months since Peloton hired one of the highest paid CEOs in all of corporate America, nothing has fundamentally changed.” In fact, since McCarthy came on as CEO, shareholders have lost more than $2 billion of value.
Additionally, the report highlights how Peloton is a “strategically valuable asset.” However, Blackwells believes a sale of the company could generate more value for shareholders “than the standalone company could be worth years from now.” This is because the firm believes that Peloton’s management has engaged in a series of execution errors that have held the company back. For example, Peloton announced a “significant transformation” last February. However, the transformation has been slow and uninspiring, and included actions such as “a cost reduction plan that lacks transparency and an underwhelming product launch.”
Meanwhile, Blackwells urges Peloton’s management to abolish the dual-class share ownership structure. Under the dual-class structure, Peloton insiders control 75% of the voting power, despite only having a 12% economic interest. In addition, recent insider sales from chairman John Foley may misalign with shareholders’ interests. Blackwells adds that the structure will “impair accountability to shareholders as long as it remains in place.”
Blackwells’ message is clear: initiate change within the company or pursue a sale. If Peloton continues to execute poorly, the firm warned that it will “pursue all avenues available — including litigation — to hold the Company and individual Board members accountable on behalf of shareholders.”
5 Investors Betting Big on Peloton
With Blackwells disclosing that it is a less than 5% stakeholder, let’s take a look at the largest stakeholders of PTON stock. According to WhaleWisdom, which tracks all 13F filers, 561 funds own the company, a decrease of 62 funds from the prior quarter. On top of that, 222 funds reported increasing their position during Q4, while 143 funds reduced their position. In total, institutional investors own 91.42% of all shares outstanding. With that in mind, let’s take a look at Peloton’s top institutional shareholders.
- Baillie Gifford – 31.60 million shares, or 10.43% ownership.
- Vanguard Group – 24.91 million shares, or 8.22% ownership.
- T. Rowe Price (NASDAQ:TROW) – 17.18 million shares, or 5.67% ownership.
- BlackRock (NYSE:BLK) – 15.52 million shares, or 5.12% ownership.
- Tiger Global Management – 10.21 million shares, or 3.37% ownership.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
