Enthusiast Gaming faces CEO, board challenge from investment firm Greywood

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Greywood Investments, an investment firm with a significant stake in the publicly traded esports and gaming media company Enthusiast Gaming, announced a campaign to replace Enthusiast’s CEO and board members Tuesday.

Toronto-based Enthusiast Gaming owns a number of video game focused publications and brands, including Destructoid, Upcomer and Addicting Games. The esports organization Luminosity Gaming, which fields rosters in the Overwatch and Call of Duty esports leagues as well as in “Valorant,” is also a subsidiary of Enthusiast. On its website, the company boasts that it reaches an audience of over 300 million gamers each month. The company’s share price dropped below $2 Tuesday.

In a letter addressed to Enthusiast’s board of directors, which includes NFL cornerback Richard Sherman, Greywood’s representatives expressed disappointment in the company’s declining fortunes.

“The frustrating part for shareholders is that the Company does in fact possess extremely talented personnel developing and/or implementing notable strategies,” reads Greywood’s letter. “We believe Enthusiast should have a market value of US$1-2 billion, not the anemic US$250-300 million market value under the current leadership.”

Enthusiast Gaming did not immediately respond to a request for comment.

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In their letter, Greywood identifies itself as the largest shareholder in Enthusiast, having acquired approximately 9.3 percent of the company’s outstanding shares at the cost of over $30 million. Greywood’s website describes the firm as one that “seeks to work constructively with portfolio companies and other stakeholders to actively support and assist management in developing and realizing the company’s full potential.”

Last fall, according to the letter, the firm reached out to Enthusiast to express “grave concerns” about the company’s direction; in response, the firm said it received “a terse, generic, disingenuous and dismissive email.”

Across the first five months of 2022, Greywood acquired increasingly large stakes in Enthusiast. In January, the firm made two filings with the Securities and Exchange Commission marking that it had acquired 7 percent of total shares, then bumping that stake up to 8 percent just weeks later. In those filings, Greywood describes itself as an investment manager for a company called Vantage Trading, which holds the vast majority of Greywood’s 9.3 percent stake in Enthusiast.

In the letter, the group outlines an “Upgrade Enthusiast” campaign, the primary pillar of which is to replace Adrian Montgomery, the company’s current CEO. Greywood also notes its intention to nominate a selection of “highly qualified and interested” candidates at a shareholder meeting in June.

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