Business: International Money Express is an omnichannel money remittance services company. IMXI offers money transfer services digitally through a network of agent retailers in the United States, Canada, Spain, Italy and Germany. It works through company-operated stores, its mobile application and the company’s websites. Its remittance services include a suite of ancillary financial processing solutions and payment services available in all 50 states in the United States, Puerto Rico and 13 provinces in Canada. It offers money remittance services to Latin America and the Caribbean countries, mainly Mexico and Guatemala. These services involve the movement of funds on behalf of an originating consumer for receipt by a designated beneficiary at a designated receiving location.

Stock Market Value: $601.9M ($18.46 per share)

Percentage Ownership: 5.64%

Average Cost: $19.14

Activist Commentary: Voss is a Houston, Texas-based hedge fund focused on underfollowed special situations. They are not traditional activists but have used activism as a tool in the past.

Voss has engaged with the company’s board and management team regarding ways to maximize shareholder value, including a possible sale of the company in a take-private transaction.

International Money Express is a money remittance services provider which enables consumers to send money from the United States, Canada, Spain, Italy and Germany to Mexico, Guatemala and other countries in Latin America, Africa and Asia. The company provides its services through a network of authorized agents located in various unaffiliated retail establishments, 118 company-operated stores and digitally via an app and its website. IMXI serves more than 4 million clients every month and has a goal of connecting families across borders, ensuring financial services are accessible to those who need them most. The company has roughly 20% market share in the top five Latin America and the Caribbean (LAC) markets and has been continually seeking expansion into new markets. For example, IMXI has made recent acquisitions of La Nacional in 2022, which has a strong market position in remittances to the Dominican Republic and other LAC countries. The company also acquired I-Transfer in 2023, which established outbound remittances capabilities from Spain, Italy and Germany. It also snapped up a money services entity in the United Kingdom in 2024, which will give the company the opportunity to provide outbound remittances from the UK.

This is not an opportunistic activist engagement for Voss. The firm initially reported holding IMXI in its Q2 2021 13F filing when the company was trading around $15 per share and it has held the stock ever since. Now, on Sept. 5, 2024, Voss filed a 13D and reported 5.64% ownership at an average cost of $19.14 per share, purchasing shares as high as $20.09 in the past 60 days.

One of the things the firm states in its 13D is that it has engaged in communications with the board and management of IMXI regarding a potential sale of the company in a take-private transaction. Voss is not the only actively engaged shareholder in the stock calling for a sale. A day prior to Voss’s 13D, Breach Inlet Capital Management sent a public letter to the board of IMXI, urging them to pursue a review of strategic alternatives that includes a potential sale of the company. Breach Inlet asserts that, despite solid operating performance and increasing adjusted earnings before interest, taxes, depreciation and amortization by over 2.5-times since going public six years ago, the company remains undervalued by the public markets. IMXI trades at under 5-times the last 12 months’ adjusted EBITDA while its peer remittances service provider MoneyGram was acquired by private equity firm Madison Dearborn for approximately 8-times adjusted EBITDA last June. Breach Inlet thinks that IMXI should be valued at a premium to MoneyGram, not a material discount, but just an equal valuation would imply a roughly $30 per share price.

Global remittances service provision is a highly fragmented market with no single company commanding greater than 20% market share. Accordingly, there could be consolidation opportunities for IMXI with a strategic acquirer like Western Union, which also trades at a premium to IMXI. If IMXI stays independent, its growth plan of expansion into the digital and European markets would require heavy investment in people and resources, sacrificing short-term performance for long term growth. This is not the type of plan that plays well in the public markets. Instead, IMXI could be a great business to be acquired by a private equity firm that can help facilitate the company’s growth plan while shielding it from the public markets, which have failed to fully value the company. You do not need to be a genius to see the allure of a company like this to private equity: A private equity firm bought it in 2007 and another one again in 2017. 

This is not the first time Voss is advocating for a strategic review at a portfolio company. In its 13D on Benefytt Technologies, filed in December 2019 when the stock was trading at roughly $14 per share, Voss highlighted the strategic opportunities at Benefytt and the active M&A environment in the company’s space. Benefytt was acquired by Madison Dearborn Partners on Aug. 31, 2020 for $31 per share. Most recently, at Griffon, Voss called for a strategic review, which the company undertook and ultimately concluded, determining to stay independent. Despite this, Griffon was a highly successful activist campaign for Voss where the firm gained board seats and made a 139.21% return on its 13D versus 1.28% for the Russell 2000 over the same period.

We strongly believe that modern day shareholder activism is a strategy that greatly benefits shareholders. We believe the best type of shareholder activism involves activists who come in with a detailed, long-term plan to create value, with a board seat being a huge plus. The other side of the spectrum is shorter-term “sell the company” activism that is often great for the investor but shortchanges the long-term shareholder. In those situations, we like to see a longer-term “Plan A” with a sale as a last resort or a detailed analysis on why the company cannot or should not continue as a standalone public company. While Voss does not provide either of these, the firm does have a lot of credibility as a long-term investor (an owner since 2021) who has not been public with its recommendations to management until now. As such, we think Voss’s intentions here are honorable and it’s doing what it thinks is best for both short-term and long-term shareholders.

If the IMXI does not execute on a strategic plan, Voss will likely consider director nominations. While a proxy fight is not likely part of its current plan, the firm has been successful in gaining board representation in previous campaigns. Voss is not afraid to take a proxy fight to a vote. At Griffon, the firm ran a successful proxy fight, winning a board seat for one of its two director nominees at the 2022 annual meeting, and later settling for another board seat. There are two directors up for election at the 2025 annual meeting and the nomination window opens on Feb. 21, 2025. If it comes to a proxy fight there are multiple factors that could work in Voss’s favor, including the company’s depressed stock price. There have also been signs of shareholder discontent, including the roughly 31% withhold votes cast against lead independent director Michael Purcell at the 2024 annual meeting

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.

Business: Forward Air is an asset-light provider of transportation services. These transportation services include less-than-truckload (LTL), truckload and intermodal drayage services and freight brokerage and supply chain services across North America, Europe and Asia. Its segments include Expedited Freight, Intermodal and Omni Logistics.

Stock Market Value: $884.7M ($31.94 per share)

Percentage Ownership: approximately 4%

Average Cost: n/a

Activist Commentary: Ancora is primarily a family wealth investment advisory firm and fund manager with $9.5 billion in assets under management. The firm has an alternative asset management division that manages approximately $1.3 billion. It was founded in 2003, and it hired James Chadwick in 2014 to pursue activist efforts in niche areas like banks, thrifts and closed-end funds. Ancora’s website lists “small cap activist” as part of its products and strategies, and its tactics have evolved in recent years. From 2010 to 2020, the majority of Ancora’s activism was 13D filings on micro-cap companies, and in the past few years they have taken a greater number of sub-5% stakes in larger companies. The alternatives team has a track record of using private and when necessary, public engagement with portfolio companies to catalyze corporate governance improvements and long-term value creation.

On Aug. 20, Ancora sent a letter to Forward Air’s board. The firm called for the initiation of a strategic review by independent legal and financial advisors, noting that improving operations and fixing the balance sheet would be better achieved as a private company.

Forward Air is an asset-light transportation company focused on expedited less-than truckload markets; all their goods are transported by ground. The company offers an alternative time-definite delivery solution at a lower cost than traditional air freight, and it also has various other transportation services including intermodal drayage, brokerage and final mile. However, most of its profits are generated by the core Expedited LTL business (80% in 2023).

Ancora has a nearly four-year history at Forward Air, initially filing a 13D on Dec. 28, 2020, and ultimately settling for two board seats on March 15, 2021. This campaign was concentrated on capital allocation, cost cutting, margin improvements and shedding non-core or underperforming assets. By late 2021, the stock began performing better after the company cleaned up the business, bringing the price to over $120 per share. Ancora exited in February 2022 and made a 58.63% return on its investment versus 5.13% for the Russell 2000 over the same period.

However, by late 2023, the company’s stock price began to languish. In October 2023, Ancora announced that it had again become a top shareholder when the stock was trading in the low-$70s. This came following the company’s announcement in August 2023, that it would acquire one of its top five customers, Omni Logistics, at 18-times trailing earnings before interest, taxes, depreciation and amortization, well above the multiple at which the company was trading. Forward Air’s stock tumbled following the announcement. Ancora vehemently opposed the deal, stating that it viewed the transaction as an entrenchment of management and the board to ensure excessive levels of compensation, and the firm argued that the deal was structured to avoid a shareholder vote. Ultimately, despite Ancora’s objections, the Omni deal closed on Jan. 25, 2024, and Ancora sold down its position in the first quarter of 2024. Since that time, the stock sank as low as $11.21 in May and is now trading in the low $30’s.

When an investor publicly agitates for a sale of the company with no detailed analysis on alternative paths to value creation, we often view such campaigns negatively as short-term opportunistic engagements, which do not showcase shareholder activism in a good light. But, in this case, Ancora ran two prior campaigns, the first of which was long-term oriented, highly successful and based upon thoughtful analysis for business improvement and collaboration. The second was launched after Ancora’s two directors resigned from the board. Ancora is now back at Forward Air once more – now as a top 10 shareholder with a position of approximately 4% – and after the company has drastically changed due to the Omni Logistics acquisition. This time the activist’s message is simple: Hire advisors and sell the company. Ancora acknowledges the path to value creation as a public company. However, the firm notes that if the company remains public, it will need to flawlessly execute to achieve deal-related synergies, cut excess costs, fix its highly levered balance sheet and grow in a profitable manner. Ancora sees this as a Herculean feat, especially for this management team and board, many of whom oversaw questionable decisions like the debt-funded acquisition of Omni.

Simply put, Forward Air is a great company that did a bad deal. It now has an over-levered balance sheet and bloated selling, general and administrative expenses. What needs to be done here – sell off non-core assets and restructure operations – is best done in private. Moreover, these are also the things that private equity funds excel at. It just so happens that private equity firm, Clearlake Capital, made the rare move of filing a 13D with language suggesting their desire to engage with the board about strategic alternatives. While this does not necessarily mean that Clearlake is the clear potential acquirer, the firm could certainly put the company in play with an offer. Clearlake owns a 13.8% stake, and Ancora owns about 4%. Irenic Capital built a nearly 5% stake earlier this year and called for a strategic review, including weighing a possible sale of the Forward Air. The key investor to watch here is major stockholder Ridgemont Equity. Ancora has two ways to force a sale of the company – through persuasion or through a proxy fight, and either way is likely going to require the support of Ridgemont, which also has two board seats at Forward Air. However, Ridgemont acquired its stake as a large shareholder of Omni Logistics and retained its ownership in the surviving company. So, there is no reason to believe the firm would not roll over its equity again in a private equity takeout. The one potential roadblock to a private equity acquisition is the company’s large debt load of approximately $1.6 billion with interest payments already suffocating the cash flow private equity investors love so much.

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.