Pleasant Lake Partners has revealed a roughly 10% holding in Funko and is pressing the pop culture collectible maker to pursue strategic alternatives, according to a regulatory filing disclosed on Thursday.
The New York-based hedge fund said it will engage directly with Funko's board and management to discuss ways to enhance shareholder value, urging an immediate and comprehensive review of options that would include both strategic and financial buyers and the possibility of a sale.
In the filing, the firm identified Fund 1, an investment entity that serves as a managing member of Pleasant Lake, as the holder of about 5.5 million shares of Funko. Pleasant Lake also stated that it is willing to take part in any sale process the company chooses to pursue and referenced its experience in take-private transactions, including involvement with L'Occitane in 2024 and Tile Shop Holdings in December.
Market reaction to the disclosure was modestly positive. Funko's shares, which fell nearly 75% over the prior year, rose roughly 4% in premarket trade. As of Thursday's market close, the toymaker's market capitalization was approximately $245 million.
Funko did not immediately provide a response to a request for comment on the filing.
The company is best known for producing pop culture collectibles such as vinyl figurines and bobbleheads. The filing and market commentary highlighted that Funko has been contending with weakened toy demand and has reported revenue declines for the past two consecutive years.
From the information disclosed, Pleasant Lake is actively seeking to prompt a strategic review at Funko and is positioning itself as both an advocate for a process and a potential participant in any transaction that emerges. The filing makes clear the fund's desire for an expedited and thorough exploration of alternatives aimed at maximizing shareholder value.
No additional details about potential suitors, timing of a review, or Funko's board response were provided in the filing.