Outerwall And Engaged Capital: Shots Fired, Investors Respond Positively

Investment firm Engaged Capital sent a letter to Redbox and Coinstar operator Outerwall Inc (NASDAQ: OUTR)'s board of directors expressing a lack of confidence in the board's strategy.

"Engaged Capital asserts its belief that OUTR's underperformance and current depressed valuation is a direct result of the Board's failed strategies, flawed capital allocation policies, and misaligned governance. Over the last four years, OUTR's Board has squandered approximately $1.2 billion of shareholder capital," the company wrote in a release Thursday morning.

The news kicked Outerwall's share price up after a dip at market open, indicating investors had more faith in Engaged than Outerwall's management.

Shares began to fall after reaching $32.89, the highest price the stock had seen since a February 5 high of $35.10.

Outerwall issued a response at 10:51 a.m. ET. The company claimed that Engaged had not discussed the details of their concerns with the board before taking it public.

"Our Company's executive management team as well as the Chairman of the Board of Directors have engaged in several discussions with Engaged Capital in an attempt to foster a constructive dialogue and understand Engaged Capital's specific recommendations, which it has declined to provide in our interactions to-date prior to releasing its public letter," Outerwall's release read.

Outerwall recently traded up 6.7 percent at $32.34.