Ancora Holdings nominates Blucora administrators, pushes for tax arm sale
Activist investor Ancora Holdings Inc. has nominated four directors to Blucora Inc.’s board and is calling for the company to explore strategic alternatives for its tax services business, including a sale. The stock rose as much as 10%.
The Cleveland-based asset manager, which owns a 3% stake in Blucora, argued in a letter to shareholders Thursday, Feb. 25, that there are few synergies between the TaxAct unit and its wealth management and registered advisory business, Avantax. Selling TaxAct could boost the company’s share price by 40% to 75%, Ancora said in the letter, a copy of which was obtained by Bloomberg.
“Ancora still believes that both the TaxAct and Avantax businesses are highly attractive assets that are currently undervalued by the public markets,” Ancora Chief Executive Officer Frederick DiSanto said in the letter. “We believe that Blucora is burdened by a classic conglomerate discount.”
DiSanto contends that selling TaxAct would allow Blucora to focus on improving and growing Avantax.
A representative for Blucora, based in Dallas, wasn’t immediately available for comment.
Blucora rose 9.5% to $18.08 at 9:55 a.m. in New York, giving the company a market value of about $871 million.
DiSanto noted that Blucora has argued that keeping both businesses creates an opportunity for converting TaxAct Pro users to Avantax advisers. From 2016 to 2019, though, TaxAct Pro picked up roughly 426 new customers while the number of Avantax advisers shrunk by 488 to less than 4,000.
Ancora said it also has concerns about board oversight, management turnover and efforts to prevent Ancora’s nominees from being considered. Ancora sued Blucora Wednesday in federal court in Wilmington, Delaware, seeking an order to block the company’s election requirements. Blucora hasn’t filed a response to the lawsuit yet, according to court records.
Ancora urged Blucora to focus its spending on paying off debt and buying back shares.
“Executing on these steps would lead to substantial balance sheet flexibility for executing a growth strategy for the Avantax business and lead to a substantially higher stock price,” DiSanto said. “We are also convinced that these actions would bring renewed investor attention to Blucora and its story, and help regain stockholder confidence.”
Ancora’s nominees include DiSanto, Cindy Schulze Flynn, Robert MacKinlay and Kimberly Smith Spacek.