After going activist a couple of months ago, Okumus Fund Management, an activist fund led by Ahmet Okumus, has stroke a deal with the board of Web.com Group Inc (NASDAQ:WWWW), under the terms of which the board appointed two new independent directors, John Giuliani and Rick Rudman. Okumus is the largest shareholder of Web.com Group, holding around 7.78 million shares, which represent 14.8% of the company’s outstanding common stock.
Okumus is a New-York based long-short fund that focuses on companies from the mid- and large-cap equity space. The fund manages an equity portfolio valued at around $532 million that contains nine stocks, mainly from the technology sector, which amasses two-thirds of the portfolio. Okumus added Web.com Group to its equity portfolio during the third quarter and quickly amasses a significant position that at the end of September contained around 7.16 million shares worth $143.05 million. The position was the largest in terms of value at the end of September and represented around 27% of the total equity portfolio value.
Throughout the last three months of 2014, Mr. Okumus has been raising his fund’s exposure to Web.com Group Inc (NASDAQ:WWWW). The fund bought around 1.40 million shares in October and it further raised its stake to the current amount of 7.78 million shares in December. Also in December, Okumus went activist on the company and said that it may engage in discussion with the company and make proposals regarding to the capitalization, ownership structure, board composition or operations of the company.
Web.com Group Inc (NASDAQ:WWWW) is a $830 million market cap company that is engaged in providing Internet services for small- and medium-sized enterprises. The company offers registration of domain names, website design, search engine optimization and marketing and other services. Following the appointment of Okumus’ nominees to the board, Web.com Group’s board has been expanded to nine members.
According to a statement issued by Web.com Group Inc (NASDAQ:WWWW), one of the newly appointed directors, Rick Giuliani is the former CEO and President of Conversant, a digital marketing platform that has been recently sold to AllianceData. Second new director, Rick Rudman is the co-founder and former Chairman, CEO, and President of Vocus, a public relations and marketing software company that was sold to GTCR last year. Therefore both directors have a significant experience in founding and running software companies that will benefit the further growth of Web.com Group.
Even though the appointment of new directors is a win for Mr. Okumus, the investor might not stop there and further push for more changes at the company in order to maximize shareholder value. Web.com Group Inc (NASDAQ:WWWW)’s stock has significantly depreciated over the last year, losing around half of its value, underperforming the majority of its peers from the Internet content industry, which inched up by 6% over the same period. The decline came despite the company reporting financial results in line with the estimates over the last several quarters.
Therefore, Web.com Group Inc (NASDAQ:WWWW) and its shareholders may benefit from the involvement of an activist investor and Okumus might found just the right time to step in. Aside from Mr. Okumus, several other investors went bullish on Web.com Group, as the previous round of 13F filings showed. Craig C. Albert’s Sheffield Asset Management raised its stake by 50% during the third quarter to 3.25 million shares. In addition, Israel Englander‘s Millennium Management and George Mccabe’s Portolan Capital Management raised their positions by 120% and 60% respectively to 669,500 shares and 445,900 shares respectively.
On the other hand, some of the key officers of Web.com Group Inc (NASDAQ:WWWW) has been unloading shares throughout the last year. In December, Kevin Carney, the CFO of the company, and CEO David Brown sold around 32,900 shares and 211,700 shares respectively that had been purchased through exercise of their stock options. In addition, both Carney and Brown has been selling shares throughout the entire 2014. Another key figure of the company, Roseann Duran, the Chief People Officer of Web.com Group, sold 20,000 shares in November. Following their last transactions, Carney and Brown own 201,073 shares and 1.02 million shares respectively, while Duran holds 105,300 shares.
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