Ancora picks up a stake in Elanco. How the investor may push to help improve margins

Business: Elanco is an animal health company that delivers products and services to prevent and treat disease in farm animals and pets. Its portfolio serves animals across its core species and offers products in two categories: Pet Health, which is focused on parasiticides, vaccines and therapeutics; and Farm Animal, which consists of products designed to prevent, control and treat health challenges primarily focused on cattle.

Stock Market Value: $7.34B ($14.90 per share)

Percentage Ownership:  ~3.0%

Average Cost: n/a

Activist Commentary: Ancora is not an activist investor. It is primarily a family wealth investment advisory firm and fund manager with $8.7 billion in assets under management, with an alternative asset management division that manages approximately $1.3 billion. It was founded in 2003 and 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 their strategy has 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 Dec. 14, Bloomberg, citing people familiar, reported that Ancora has taken a position in Elanco and is pushing for a replacement of the company’s CEO, changes to the company’s board composition and improved margins.

Elanco is one of the largest global animal health pharmaceutical companies, developing and marketing products for both pet health and farm animals. It operates in a secularly growing industry,…