Ancora Advisors is knocking on the truck dealer Rush Enterprises ($RUSHA). It wants it to get rid of its dual-class share structure to ensure better performance.
Ancora Advisors sent a letter earlier this month that said the company's "chronic valuation discount" was due to its dual class structure. The structure is common in family-owned companies like Rush, in which the company's founders and management retain higher voting power.
The activist wants to keep Rush Peterbilt and management in control, but it thinks a staggered board would work better.
"The Peterbilt agreement requires the Rush Family and management to hold a minimum of 22% of the votes," the letter stated, "We believe 22% is low to the point it is insignificant and pointless...The new arrangement would not eliminate a host of potential shareholders (institutional investors... that explicitly do not buy stakes in companies with dual-class shares)."
The activist has compared it to peers Lithia Motors (NYSE:LAD), Penske Automotive (NYSE:PAG), Asbury Automotive (NYSE:ABG), Group 1 Automotive (NYSE:GPI) and Sonic Automotive (NYSE:SAH). Compared to these peers, Rush returned just over 96% to shareholders over the past three years, while the median of the comparable group returned over 128% over that same period.
Ancora owns 4% of the voting power at Rush and is willing to give up some of its voting power in exchange for the increased liquidity and share price appreciation.