Jonathan Litt’s Land & Buildings Investment Management, a hedge fund and approximately 3% shareholder in Six Flags Entertainment (US:SIX), on Wednesday, urged radical changes and said that the theme park company could add $11 per share by monetizing its real estate and executing an operational turnaround.
The hedge fund believes that a REIT conversion or sale of the company’s real estate could double its share price in 18 months. Land & Buildings also believes that multiple parties would be interested in a sale-leaseback transaction of Six Flags parks at a premium valuation and that a Six Flags REIT would trade at a superior valuation compared to SIX shares today.
The company faced challenges recently, including declining attendance and financial struggles. In response, Six Flags tweaked its strategy, updating its parks and rides, expanding its partnerships and sponsorships, and focusing on the guest experience. Despite these efforts, the company’s stock price languished, which has led to criticism from investors like Litt.
Six Flags confirmed that it received Land & Buildings presentation and replied that it “regularly engages with investors and values constructive input from shareholders. Six Flags is optimistic about its progress under its strategic plan and remains committed to providing a top-quality guest experience and driving long-term earnings growth,” the company said.
Activist investors have played a significant role in Six Flags’ recent history, advocating for strategy and management changes to improve the company’s performance and increase shareholder value.
One example of an activist investor at Six Flags was Paul Singer’s hedge fund, Elliott Management. In 2010, Elliott acquired a significant stake in Six Flags and began pressing for changes at the company. This included pushing for the sale of noncore assets, reducing debt, and improving financial performance. In 2011, Six Flags announced a restructuring plan that included selling several properties and appointing new board members. The company’s stock price rose significantly following these changes, and Elliott Management ultimately realized a profit on its investment.
Other activist investors have also taken positions in Six Flags and advocated for changes at the company. For example, in 2017, Marcato Capital Management acquired a stake in Six Flags and called for the company to improve its financial performance and increase shareholder value. The company ultimately adopted Marcato’s recommendations, including selling certain properties and appointing new board members.
This article originally appeared on Fintel
It’s Your Money, Your Future—Own It (sponsor)
Retirement can be daunting, but it doesn’t need to be.
Imagine having an expert in your corner to help you with your financial goals. Someone to help you determine if you’re ahead, behind, or right on track. With SmartAsset, that’s not just a dream—it’s reality. This free tool connects you with pre-screened financial advisors who work in your best interests. It’s quick, it’s easy, so take the leap today and start planning smarter!
Don’t waste another minute; get started right here and help your retirement dreams become a retirement reality.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.