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Activist investor urges Colony Credit to replace investment team

  • Blackwells Capital LLC, an alternative investment management firm, calls on Colony Credit Real Estate (NYSE:CLNC) to replace its Colony Capital-provided investment team rather than "internalize" it as proposed by Colony Capital Chairman and CEO Tom Barrack.
  • Blackwells, which holds shares in CLNC, points out that "investors have lost confidence in this team and the stock now trades at a significant discount to book value, while public peers trade at a premium" in an open letter to the company's board.
  • “Under the leadership of CEO Kevin Traenkle and Colony Capital Executive Chairman Tom Barrack, Colony Credit has repeatedly written down its assets and cut its dividend dramatically," the letter notes.
  • Blackwells Capital is also a shareholder of Colony Capital (NYSE:CLNY), which owns 37% of Colony Credit.
  • In the past six months, CLNC has declined 13% vs. the financial sector's median performance of +7.1% during the same period.
  • Previously: Colony Credit Q3 reflects portfolio split, dividend cut (Nov. 7)

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Comments (19)

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Williams Equity Research profile picture
Get out of this debacle while you can. Anyone who scrutinized the deal that caused CLNC to exist in the first place would never allocate capital to this stock. -WER
Barrack should have been fired an year ago,the board is useless!!
Too bad the current management team pay is not tied to performance.
Good idea. Couldn't do any worse.
John Sheehy profile picture
Similar to my letter:
@John Sheehy Thanks for sharing your well-written letter.
Continue to accumulate CLNY common at these prices. Paying a great dividend and new CEO will transform the company. Relax, clip the coupons and wait.

I think divi will likely be cut or eliminated once transformation starts.
They will have to change to non REIT if they don’t want to pay dividends. Do you think they will do that? I own their preferreds.
Will have a better picture Wednesday when they hold an investor presentation on there transformation.
Alfonso Larriva profile picture
It's Worst In Class Management. The whole thing should just be sold off to someone like LADR capital who knows how to run it, or if that isn't possible new management would be fine. Preferably someone who isn't in Los Angeles.
That’s one ugly chart! I encourage potential shareholders to look at the 10,5 and 1 year charts !
What's a 10,5 year chart going to tell you that a 2,1 year chart doesn't?
Thankfully, the 10, 5, and 1 year charts tell us nothing about the future. "Hopefully" Blackwells can shake it up and get some smart people in a position to make future decisions. We'll see.
CLNC has only existed since Feb 2018.

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