Since responding to Roaring Blue Lion’s request for a board seat by giving them the Heisman, HomeStreet (Nasdaq:HMST) has added two directors.
In January, HomeStreet added Mark Patterson to fill a newly created vacancy and then, yesterday, announced that Sandra Cavanaugh would join the board on May 24, the next regularly scheduled board meeting and the date of their annual meeting (and denouement of their current proxy contest with Roaring Blue Lion).
While neither Mr. Paterson or Ms. Cavanaugh seem to have any particular qualifications that would help HomeStreet address its obvious challenges, they certainly appear qualified enough in a general sense to be directors and I assume they will exercise their duties responsibly and with care. However, taken in tandem, there is something a little too cute about these appointments.
Specifically, each previously worked for a large HomeStreet stockholder. Mr. Patterson worked for NWQ Investment Management Co. LLC until his retirement in 2014 and Ms. Cavanaugh worked for Russell Investments until 2016.
This is a look at HomeStreet’s largest stockholders:
Both Mr. Patterson and Ms. Cavanaugh are several years removed from their employment by NWQ and Russell, respectively, and while Mr. Patterson seemed to be involved in NWQ’s investments in bank stocks, Ms. Cavanaugh seems to have spent her career focused on distribution. There is no claim or disclosure that I could find that either Mr. Patterson or Ms. Cavanaugh were appointed pursuant to any agreement or understanding with (or even with the knowledge of) any stockholder.
Does it seem like Mr. Patterson and Ms. Cavanaugh are (or would be) qualified additions to HomeStreet’s board? Sure.
Does it seem a little too coincidental that both worked for large stockholders of HomeStreet? Kind of.
Does it feel like this is an attempt to give the impression that HomeStreet’s board, management and strategy has the imprimatur of two of its largest stockholders leading up to a contested director election? Yeah, it sort of does.
I guess we will find out next week if that is actually the case.