Game enthusiasts confront an activist while a top owner blows up the CEO and Board of Directors

Enthusiast Gaming Holdings Inc. , the Canadian consolidated esports and video game platform company, has been revolted by its largest shareholders, who claim that the company’s CEO and board of directors do not serve the interests of investors.

Graywood Investments LLC said Tuesday that it will seek to replace the majority of Enthusiast’s directors and remove Adrian Montgomery from his role as CEO.

In a later issue on Wednesday, Greywood named the six candidates for the Enthusiast Board of Directors elections, including Dan Petrozzo, a former partner at Goldman Sachs who is also head of global technology for investment management at Wall Street; Janie Lee, who stated Greywood was “involved in several billion dollars” in mergers and acquisitions; and David Goldhill, who is currently CEO of a telehealth platform called Sesame, and previously served as CEO of Game Show Network.

“In the rapidly changing and exponentially growing areas of gaming, esports and technology and with the development of Web 3.0, it is imperative that change be implemented at the highest levels of the company immediately. Shareholders expect and will not tolerate anything less,” Greywood wrote in his letter.

In a six-page letter to the Enthusiast Board of Directors, Graywood outlined a series of complaints about Enthusiast’s management and governance. She called Montgomery “harmful” to enthusiasts, and denounced the lack of alignment between managers and investors; Graywood said it owns more shares in Enthusiast (9.3 percent) than the company’s entire board of directors combined (5.7 percent).

A filing with the US Securities and Exchange Commission revealed that Greywood’s holding of approximately 12.5 million enthusiast shares consists largely of the 9.8 million shares owned by Vantage Trading LLC.

In a statement released Tuesday night, enthusiasts called Graywood’s opening shots “a misleading and baseless message.”

The company’s response has largely focused on framing its recent financial performance as an indication of its growth potential, and it has raised questions about Greywood’s motives and background.

“What is clear is that they have no plan for the company other than to have complete control of the board, for their own, unspoken purposes, without providing a premium to shareholders. This is evidenced by Greywood’s unique focus on CEO Enthusiast Gaming and a list of grievances that have nothing to do with shareholder value on the long term “. Communications consultant.

Enthusiast, which claims more than 300 million viewers per month across its platforms, reported a 57 percent increase in first-quarter revenue when it released results last week. The performance prompted RBC Capital Markets analyst Drew McReynolds to raise his target price to $8.00 per share from $7.00, and stated that he believed the company was at an “inflection point” showing its growth potential.

McReynolds isn’t the only one who loves stocks. All seven analysts tracked by Bloomberg have a buy recommendation on Enthusiast, with a 12-month consensus target of $8.39, implying a potential return of 210.7 percent from Friday’s closing price on the Toronto Stock Exchange.
Excited shares are down 27 percent year-to-date on Friday, and are down 75 percent from their peak of $10.87 on April 20, 2021.

“Well, we live in a very difficult macro environment for tech companies and growth companies,” Montgomery said in an interview on May 16. “Let’s face it, we live in a world where both Microsoft and Apple are down more than 20 percent, which is unfortunate but I wouldn’t expect enthusiast games to be completely immune to that.”

The stock price was called twice as much by Greywood in its letter, saying it believed Enthusiast should have a market capitalization of $1 billion to $2 billion, as opposed to what it described as the company’s “weak” market capitalization range of $250 million US to 300 million US dollars. At Monday’s closing, the market capitalization of Enthusiast’s Nasdaq listing was $281 million.
“With appropriate leadership and focus, we see a realistic path forward for the $4-5 billion company,” Greywood stated in his letter.

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