(Bloomberg) -- Alta Fox Capital Management LLC plans to nominate director candidates to the board of Daktronics Inc. after first amassing a stake in 2022, the activist investor said at the Bloomberg Activism Forum 2024. 

The activist investor believes that Daktronics is trading at a “governance discount” due to its staggered board and a so-called poison pill plan, said Connor Haley, managing partner at Alta Fox during a presentation.

The nominations could pave way for a proxy fight after Alta Fox failed to push for board refreshment at the company in private engagements. 

The investor also criticized the employment of family members within the company including Chief Executive Officer Reece Kurtenbach and vice president of manufacturing Matthew Kurtenbach, who are the sons of Daktronics founder Aelred Kurtenbach. The connections are confirmed by a proxy filing this year. 

An improvement in governance, investor relations and finances could boost the company’s share price to $40, Alta Fox said. Shares of Daktronics closed at $19.24 on Tuesday, giving the company a market value of $904 million.

A representative for Daktronics, which supplies electronic scoreboards and displays, didn’t immediately respond to a request for comment.

Daktronics’ stock price has climbed about 80% since Kurtenbach took over as CEO in 2013, trailing the S&P 500 Index which more than tripled during the same period. 

Alta Fox was part of a $100 million capital raise for Daktronics last year, participating in a convertible debt financing, according to a statement at the time.

The Texas-based investment fund founded in 2018 is also an investor in Forward Air Corp. and Hasbro Inc.

©2024 Bloomberg L.P.