Abigail Disney Assumes a Bigger Role at Shamrock
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
Having saved the Walt Disney Company, Abigail Disney is now out to save the world. Well, that’s a bit of an exaggeration, but given the enthusiasm and passion embodied in this over-scheduled mother of four, almost anything seems possible.
Ms. Disney is the grand-niece of Walt Disney, and daughter of Roy E. Disney. Roy Disney is currently a director emeritus of the company that brought us Mickey Mouse, the Magic Kingdom and several lessons in corporate governance. The family today owns less than 1% of Disney’s widely scattered shares, but nonetheless maintains a proprietary vigilance over company affairs.
Roy E. Disney and his partner and former Disney board member Stanley Gold were instrumental in bringing Michael Eisner to revive the inert company in 1984, and were then also behind his exit 21 years later. In the intervening years, Mr. Eisner had helped unlock the enormous value hidden in the characters and stories dreamed up by Walt Disney, bringing about a decade of outstanding stock price gains. Unhappily, over the next ten years Mr. Eisner lost his footing, and the confidence of the family as well.
The experience with Disney has taught Abigail Disney a good deal about shareholder activism, which she is putting to good use in her role as vice chairman of Shamrock Holdings of California. This outfit was founded in 1978 to manage the Disney family’s investments. Today, Shamrock is accepting outside funds and has invested approximately $1.3 billion, of which about 10% is from the family. Shamrock manages several private equity funds, including an activist fund, a private equity fund in Israel, and a socially-motivated real estate fund in Southern California.
Ms. Disney describes herself as an active board member, working closely with the senior executives of the firm, helping to raise money and brainstorming on strategy. Amongst her three siblings, Ms. Disney appears to be the next generation’s point person for the family’s investment arm.
Shareholder activism is hot as can be. Several funds have reached the top of the performance charts by buying stakes in public companies and then pressing for changes in the way a company is run, or in who is running it. Shamrock has been involved in the activist space for two decades, during which time it has funneled $725 million into 28 publicly owned companies. Today the fund has approximately $475 million invested.
The group looks for small or microcap companies (enterprise value less than $1.5 billion) in America that are beneath the radar of the activist megafunds and that are undervalued by dint of governance lapses or poor management. Shamrock typically takes a meaningful position (of $35 to $75 million) and then begins to agitate for change
Recently, for instance, Shamrock has rocked the boat of a computer networking equipment manufacturer called iPass, of which it owns 12%. Shamrock has complained about excessive executive compensation, governance lapses, and inappropriate investments, more or less threatening a proxy battle if nothing is done to address these charges.
Such programs can turn out extremely well. Last year Shamrock built a 6.83% stake in a company called Intrado, which provides data to route 911 calls across the nation. Shamrock moved to nominate three directors to the board and called for management to undertake a thorough analysis of financial results and operations. Shamrock had bought most of the Intrado shares at an average price of around $12.50; earlier this year the West Corporation bought Intrado for $26 per share.
The companies which appear to attract Shamrock’s interest typically have strong balance sheets and cash flows, and a poor record of reinvesting the cash generated from the business. In other words, just like the old Disney Company.
Abigail Disney is not only involved with the activist fund. She serves currently on the board of The Harlem Globetrotters, now partially owned by Shamrock. Ms. Disney received a BA in English literature at Yale, as well as a master’s degree from Stanford and a Ph.D from Columbia. She is, she ac knowledges, receiving her financial training on the ground. And, not only from her activities with Shamrock.
Ms. Disney is also active in philanthropy. In 1991, she and her husband started up the Daphne Foundation, which each year donates about $1 million to organizations “that confront the causes and consequences of poverty in the five boroughs of New York City.” She serves as honorary cochair of the New YorkWomen’s Foundation, which funds numerous community-based undertakings that support women and girls.
From the beginning, Ms. Disney sought to distinguish Daphne from most foundations, by donating hard-to-find operating (as opposed to capital) funds, and by serving New York’s most disadvantaged communities. The most notable departure from the norm, perhaps, is that this is not a glitzy operation.
“I am not a glamorous person” Ms. Disney declares, perfectly happy to be true to her family’s Midwestern, down-to-earth roots. Like her forebears, too, Ms. Disney has a certain starry-eyed optimism that fuels her efforts, and that may stem from being a person of privilege. Or, it may come from growing up in the Magic Kingdom “where your dreams come true.”