Cannae Holdings Inc., the investment firm led by Fidelity National Financial (FNF) founder and Chairman William Foley II, is facing accusations of poor governance and a lack of strategic focus from activist investor Carronade Capital Management.
Carronade points to actions it claims have contributed to a loss of almost $1 billion in shareholder value. The firm holds 2.9 million shares in Cannae and took its grievances public with a recent regulatory filing and a letter released Thursday.
The letter criticizes Cannae’s “vague and undifferentiated” investment approach and condemned recent board actions. These include an accelerated equity vesting plan for directors if they are not reelected and a requirement for Cannae to repurchase half of Foley’s shares “at a significant premium to market prices.”
“We believe this offensive action trounces shareholder rights and the Board’s fiduciary duties and further disenfranchises the Company’s true owners,” the letter stated. “It also makes clear to us that Cannae has not been engaging in good faith dialogue despite our persistent and sincere efforts, which necessitated the need to release this letter with the goal of reaching the entire Board and building a market consensus on the best path forward for the Company.”
Carronade was founded by investor Dan Gropper. It is calling for Cannae to divest its holdings in publicly traded companies and focus on improving the performance and valuation of its private investments.
Gropper, along with firm partner and head of research Andy Taylor, added their signatures to the end of the letter.
“Despite a handful of successful investments in the past, the current portfolio of private investments is consistently marked at cost, and the remaining investments in public equities have destroyed approximately $900 million of value,” the letter stated.
A lack of strategic cohesion and minimal portfolio disclosure have eroded investor confidence, they added.
“There has been no clear investment narrative for shareholders to rally behind, as we consistently hear Cannae described simply as the Bill Foley co-investment vehicle,” the letter stated.
Company shares have struggled, declining nearly 50% over the past five years, according to Cannae’s 2024 annual report. The firm was part of FNF until a formal separation in 2017.
Cannae suffered a high-profile setback in 2020 when it attempted to acquire real estate data firm CoreLogic alongside Senator Investment Group LP. The firms were ultimately outbid by Stone Point Capital and Insight Partners in a $5.9 billion deal.
Cannae responds to allegations
Cannae has defended its approach, saying it has taken steps to cut management expenses and better align executive incentives with shareholder interests by shifting compensation primarily to company stock.
“The strategic plan the company has already begun implementing will deliver better long-term returns to our shareholders than the actions proposed by Carronade Capital,” Cannae said in its response.
Foley, who became Cannae’s CEO last year, reaffirmed the company’s commitment to its current strategy.
“Our Board of Directors and management team remain dedicated to driving long-term value creation, and the efforts taken to execute the Company’s strategic plan is a reflection of that commitment,” he stated in the firm’s response. “Importantly, we remain optimistic on the outlook for our portfolio companies and their significant embedded value.
“We also remain focused on returning capital to shareholders and will utilize capital from the sell-down of existing public portfolio company holdings to further buy back our stock, given our continued commitment to reduce Cannae’s share price discount to net asset value (NAV).”
In response to investor pressure, Cannae has been restructuring its portfolio. The company has raised $470 million through recent stock sales, including 10 million shares of Dun & Bradstreet for $101 million and 4 million shares of Dayforce for $264 million.
Additionally, Cannae has returned $738 million to shareholders over the past four years, repurchasing 35% of its common stock with authorization to buy back another 12.3 million shares.
Proxy battle ahead
Carronade has notified Cannae of its intent to nominate four independent directors at the company’s 2025 annual meeting, setting the stage for a heated proxy battle.
Gropper contends that Cannae’s deep trading discount in relation to its NAV — averaging 40% below its asset value — reflects a “failure in capital allocation, strategic planning, and governance oversight.”
“A well-managed company with a strong asset base should not be trading at such a deep discount,” he wrote. “We believe this misalignment points to a failure in capital allocation, strategic planning, and governance oversight.”
