Fidelity National Financial Inc. is a deal-making machine, with a sometimes dizzying array of transactions involving companies outside its main business of title insurance.
However, as Fidelity President Brent Bickett outlined some of those moves at Wednesday’s annual meeting, he said the company’s deals have benefited shareholders.
“In 2014, we really had an exciting year,” Bickett said at the meeting at Fidelity’s Riverside Avenue headquarters complex.
“Lots of tremendous activity there. We’ve created a lot of value for our shareholders,” he said.
The biggest move in 2014 was the creation of a tracking stock called FNFV Group that represents the non-real estate-related businesses in Fidelity’s investment portfolio.
It can be confusing, since the stock is separate, but all of the FNFV businesses are still owned by Fidelity. After the meeting, Bickett explained that investors can look at FNFV simply as an “asset management fund” that is run by Fidelity.
Bickett told shareholders that before the split, some of FNFV’s investments had “clouded” the strong performance of Fidelity’s main business, which is the dominant company in its field with 32.4 percent of the U.S. title insurance market.
He also displayed a graph showing that profit margins in its title insurance business have consistently outperformed the industry through various cycles in the business. That should attract investors interested in a real estate-related company.
“There’s no reason they shouldn’t invest in our stock,” he said.
Fidelity’s real estate-related businesses include its majority control of Black Knight Financial Services Inc., a mortgage processing and analytics firm that had an initial public offering last month. Fidelity retained a 55 percent voting interest in Black Knight after the IPO.
Black Knight’s stock was priced at $24.50 a share in the IPO and it has traded above that since it hit the market four weeks ago, reaching a new high of $29.74 on Wednesday.
“It exceeded even our expectations,” Bickett said.
Black Knight provides processing services for 57 percent of all U.S. mortgage loans and its analytics division has data on 99.99 percent of the market.
“We’re extremely excited about the prospects for this business,” Bickett said.
At the meeting, Fidelity stockholders approved a proposal made by a shareholder to give large stockholders greater rights to nominate directors to the company’s board.
The proposal gives shareholders who have owned at least 3 percent of the stock for at least three years the ability to nominate up to one-fourth of the directors serving on the board.
The name of the shareholder making the proposal was not included in Fidelity’s proxy statement but Michelle Taylor, manager of corporate governance and proxy voting for the New York City Comptroller’s Office, came to the meeting to introduce the resolution on behalf of city pension funds. She said Fidelity should seek more diversity on its board.
Fidelity’s 10-member board, including three directors who were reelected at Wednesday’s meeting, is all male.
The resolution was approved by a majority of shareholders despite opposition from Fidelity officials. Bickett said after the meeting the company’s governance policies are serving shareholders well.
“We’re efficiently managed. We work well together,” he said.
Taylor after the meeting could not say if the New York comptroller has any plans to nominate directors at next year’s annual shareholders meeting.