Activist shareholder Windward Management is pressing Cineplex (TSX: CGX) to accelerate share repurchases, sell non-core assets, and prepare for a potential sale, asserting the stock could nearly triple by the end of 2026.
In an open letter, the hedge fund said Cineplex is “deeply undervalued” despite an improving box-office backdrop and a stronger balance sheet.
“Over the past year, we have had multiple meetings with the management team and have shared our views on value creation. While we believe we are generally aligned, we are frustrated by the absence of a sense of urgency exhibited by the Company’s leadership,” the shareholder noted.
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Windward, which says it owns around a 7% stake and is one of its top three shareholders, is urging a renewed and aggressive share buyback program. The firm argues Cineplex could repurchase roughly 55% of its market capitalization through the end of 2026 while remaining within target leverage.
It also wants divestitures of the digital media segment and the remaining Scene+ stake, estimating proceeds of more than $220 million to fund a substantial issuer bid.
“The movie theater business isn’t dying — it’s on the verge of a major resurgence, and Cineplex is perfectly positioned to ride that wave,” said Windward founder Marc Chalfin. “With the stock deeply discounted, now is the time to go on offense: a bold share buyback, paired with strategic divestitures, would unlock significant shareholder value and show that leadership is ready to seize the moment.”
Windward points to four consecutive months (April–July 2025) with more than $50 million in monthly box-office revenue for the first time since 2019. Second-quarter attendance rose 32.7% to 11.6 million, while box-office sales climbed 38.4% to $158.5 million, driven by titles including Inside Out 2, A Minecraft Movie, and Lilo & Stitch.
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On balance sheet trajectory, Windward expects net debt to fall to around 3x EBITDAaL by early 2026 (excluding convertible debt), with free cash flow improving. It pegs 2026 EBITDAaL at more than $260 million, above expectations and broadly aligned with management’s path to $250 million. The firm characterizes Cineplex’s unlevered free cash flow yield as “high-teens,” calling the stock a discount to peers.
Windward is also leaning on governance and timing. CEO Ellis Jacob plans to retire at the end of 2026, and no formal succession plan has been disclosed. The investor says that transition could make a sale “highly likely,” especially with valuations still below pre-pandemic levels and financing conditions potentially easing.
For its part, Cineplex has already sold a portion of Scene+ for $60 million during the pandemic and divested the Player One amusement business for $155 million in 2023. Windward argues those moves, combined with deleveraging and improving cash generation, give Cineplex ample capacity to pursue “imminent” buybacks and a larger tender offer.
The activist cites its own track record—prior campaigns at Netgear and Groupon pushing buybacks and strategic actions—and claims a 113% net return since inception versus 37% for the S&P 500 Total Return over the same period. It sets a price objective of “more than $30” by the end of 2026, implying nearly 200% upside from current levels.
Cineplex has been here before: a $2.8 billion acquisition by Cineworld in 2019 collapsed when the pandemic shuttered theaters. The shares have not revisited the prior $34 offer price since.
Information for this story was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
