Like many things Warren Buffett does, his move to sell off the remainder of his holdings in H&R Block, the US tax preparer, in the past few months looks smarter by the day. H & R Block is facing a tough proxy fight after two big shareholders threw their weight behind the dissident board slate put up by Richard Breeden, a former SEC chairman, reports the FT.
Ariel Capital Management, which holds just over 5 per cent cent of H&R Block, said on Friday: “It is the present intention to vote the shares of H&R Block held on behalf of… clients in favour of the three board candidates nominated by Breeden Partners.”
The move by Breeden Partners, an activist hedge fund set up by Mr Breeden, has crystallised long-standing shareholder complaints over H&R Block’s attempts to diversify into banking and mortgage lending. One shareholder described those moves as “disastrous”.
Breeden’s dissident candidates, which include Mr Breeden himself, aim to unseat three sitting H&R Block directors at the group’s annual meeting on September 6. If elected, the Breeden candidates would consider divesting the company of its non-core businesses, including its bank and its brokerage business.
Some sources said that T Rowe Price, which held close to 10 per cent of H&R Block, was also likely to throw its weight behind Breeden. T Rowe Price said it could not comment.
H&R Block shares have fallen by about 20 per cent this year. Warren Buffett’s Berkshire Hathaway, once the second-biggest investor, sold its remaining shares in the past few months.