Getty Images (NASDAQ:GETY) stock is having some trouble on the home front. Indeed the American-British visual media company is down more than 5% today after activist investor Trillium Capital released a letter to Getty’s board of directors accusing the company of neglecting its fiduciary responsibility.
What do you need to know about Getty and Trillium today?
Well, this morning, Trillium, owner of hundreds of thousands of GETY shares, publicly disclosed a letter demanding Getty take action to enhance its share price.
“We believe that the Board of Directors of Getty (the “Board”) has not acted on obvious opportunities to increase shareholder value. The stock price of Getty has declined substantially since its IPO … We now have no choice but to publicly urge them to take action to enhance shareholder value. We believe that the Board has a fiduciary duty to its shareholders to immediately act to improve shareholder value.”
According to Trillium, Getty is currently trading at a level far below its value — $3.1 billion below its worth, to be exact. Trillium argues GETY stock should be about $12, roughly double its current price. Indeed, from its high of roughly $40 per share following its initial public offering (IPO), Getty has fallen dramatically.
What else did Trillium have to say about Getty?
GETY Stock Plummets Following Trillium Letter
In the letter, Trillium offers a number of recommendations for Getty to recoup their value. This includes selling Getty to a strategic buyer, selling Getty to a private equity firm, taking Getty private, corporate and administrative cost-cutting, paying down its $1.428 billion in debt, and changing the company’s executive leadership. Trillium also describes the hidden enterprise valuation Getty possesses, that “has not yet been unlocked by the executive team.”
That’s not all. Trillium had more than suggestions for the media company.
In a series of LinkedIn posts two weeks ago, Trillium Chief Executive Scott Murray made clear the drastic action his company was willing to take as one of the largest owners of GETY stock.
“I own hundreds of thousands of [shares] of Getty Images … The stock is down from a high of $38 to around $3.50 a share. The Board needs to conduct a strategic sale or a take private. The stock would trade above $10 a share or more. Another option is a share repurchase. If the Board does not act then we will begin an activist campaign … Getty has the largest collection of images and videos. Time to roll.”
Getty Images has something of a historic past. Founded by the Mark Getty in 1995, Grandson of oil tycoon J. Paul Getty, once the richest person in the world, Getty Images was passed between various private equity firms between 2008 and 2012. In 2018, however, the Getty family reacquired full control of the company for $3.3 billion dollars.
Some analysts have come to Getty’s defense, arguing today’s letter is both impractical in some ways and unlikely to bring about any real changes.
This includes Wedbush analyst Michael Pachter, who recently shared his skepticism with Barron’s, saying, “They are slow growth (but are growing), and the current share price is around 12 times next year’s Ebitda expectations. Private equity rarely pays more than that.”
On the date of publication, Shrey Dua 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.
