Core-Mark Investor Said to Push for Changes to Improve Returns

(Bloomberg) -- An investor in Core-Mark Holding Co. is considering nominating directors at the convenience store supplier if its board doesn’t take steps to improve its performance, according to people familiar with the matter.

JCP Investment Management has built a roughly 1.5% stake in Core-Mark since late last year, and has met with the company to discuss its views, the people said, asking not to be identified because the discussions are private.

The Houston-based investment firm, which is run by James Pappas, is calling on Core-Mark to release a five-year plan to better articulate its strategy, and buy back more shares to improve returns. It also wants the company to prioritize organic growth opportunities, including selling products to customers beyond the convenience store sector, the people said.

A representative for Core-Mark declined to comment.

JCP Investment believes making these changes could bring the company into line with its peers, with its cash flow per share growing 7% to 13% a year, the people said.

Total shareholder returns at Core-Mark were nearly 39% over the past 12 months but they have trailed the broader Russell 300 Index Diversified Retailers Subsector, which gained almost 51% over the same period, according to data compiled by Bloomberg.

The stock rose 0.6% to close at $32.26 in New York Tuesday, giving the company a market value of about $1.5 billion.

Core-Mark is one of the largest suppliers for the convenience store sector in North America, providing a range of services at about 41,000 locations across the U.S. and Canada, according to its website.

JCP Investment has a history of pushing for changes in the convenience store space, having agitated at companies such as CST Brands and the Pantry Inc. before they were acquired by Alimentation Couche-Tard Inc. It also urged Casey’s General Stores Inc. to explore a sale in 2018.

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