By Jack Cumming
Brookdale is in the people business. Brookdale harbors people who are nearing life’s end, and it employs people to care for those it harbors. That simple core reality seems contrary to the thinking of Brookdale’s Board if we are to believe recent news reports. Of course, Board members are people too, but at Brookdale, they seem to think that all they need to know is how to make money. That’s vapid.
Board Myopia
The messaging puts shareholder aggrandizement before all other possible business purposes. We would expect that the Board members are shareholders themselves. To paraphrase an old Ethel Merman hit, “I’m a shareowner, too.” If you remember that song, she sings, “I’m an Indian too, a Sioux, a Sioux.” Listening to the news out of Brentwood, the country music suburb where Brookdale is headquartered, I’m tempted to sing, “I’m a shareowner too, I’ll sue, I’ll sue.” Litigation, though, helps no one. Why not do the right thing in the first place instead?
From a distance, it appears to this observer that we are witnessing a grandiose act of irresponsibility driven by money interests that don’t care a hoot about the lives they are impacting. I’m sorry. That may be the ethic of some people. It’s not my ethic. I think that not only do people matter, but they matter the most. Moreover, people are the source of money that capital mongers so crave.
Money Über Alles
At first, it was Jonathan Litt and Craig Melcher, dba Land and Buildings Investment Management LLC. They proclaimed themselves smart, clever investors and proposed reorganizing Brookdale to maximize returns to real estate investment trust investors. At the time, Brookdale was trading in the $10 range, roughly double where it is today, but down from its peak near $50, and well down from $37, where I bought in.
On the surface, all investors care about is the return they get on their investment. Kevin O’Leary regularly voices that sentiment on Shark Tank. Milton Friedman gave it academic cover in a 1970 New York Times Op-Ed titled, “The Social Responsibility of Business Is to Increase Its Profits.” Litt and Melcher are of this school. Residents and employees of Brookdale properties are just rent rolls to be traded willy-nilly.
That Didn’t Work
We know how that Litt/Melcher influence worked out. Brookdale took their critique seriously. Andy Smith, Brookdale’s CEO, was sacrificed in the process, and others of talent read the writing on the wall and also exited. Following the advice to prune the portfolio of communities, Brookdale went from 1,100 communities in 46 states, serving about 80% of the U.S. population, to roughly 640 senior living communities across 41 states. The stock price has languished.
Now comes Ortellus. Ortellus describes itself as “… an activist hedge fund group … founded in 2015 by Peter DeSorcy and H.R.H. Prince Pavlos.” Pavlos, putative Crown Prince of Greece and Prince of Denmark, is a Greek financier. Peter DeSorcy is known to senior living insiders for sowing chaos in 2021 with Capital Senior Living when he wrote a letter to Capital’s Board opposing a contemplated corporate transaction. Capital, then, is now “Sonida.”
Repeating An Old Ploy
Ortellus’s DeSorcy is opportunistically repeating that approach at Brookdale. On April 24, 2025, DeSorcy wrote a letter to Brookdale’s Board proposing, among a laundry list of demands, “installing a new management team and refreshing the Board.” In short, Ortellus, with 1.3% of Brookdale’s common stock, is proposing what appears to be a hostile takeover.
What’s the plan? It’s a rerun of the Litt/Melcher medicine with new word constructs. To the Litt/Melcher vocabulary of PropCo and OpCo, DeSorcy drops OpCo (thus casting residents and staff into invisibility) and adds LeaseCo, GoodCo, and BadCo to the mix. What do these “activists” have in common? (1) They put money before people; (2) they come in as know-it-alls, sowing chaos; and (3) they have little empathy for ordinary people.
Enough Already
We’ve been here before, and we know this approach doesn’t work. The truth of the matter is that people do matter. Every successful entrepreneur, from Andrew Carnegie to Jeff Bezos and beyond, has understood that people matter. Money may seem to be easy from the royal perspectives of hedge funds and private equity, but that collective money results from the productive efforts and life savings of workaday people who deserve better than to be cast aside.
Lest the not-for-profits start feeling a bit smug at this point, a word of caution is in order. You may think, “We don’t have those greedy shareholders to have to please.” While that’s true, you also don’t have the accountability that calls the investor-funded enterprises to their responsibilities. If you have a top-down organization with no members or a single corporate member, then you, too, are casting residents and employees into a lesser humanity.
A Cause to Believe In
Brookdale’s opportunity is one of upending how Americans live to give them better living throughout life, especially into old age. Stop playing money games and start putting people first. Our constitution opens with the words, “We the People …” That applies to business as well as to governance. Don’t let greed blind you to the obvious. Brookdale can lead the breakout of the senior living industry into a new era for all Americans if only the imagination and the will are unleashed from the captivity of conventionality and greed.
Ian Bremmer, a respected commentator on American culture, calls the United States a kleptocracy. He notes the trend of businesses to reward those at the top at the expense of the customers and lower-level employees. That’s kleptocracy. The danger is that the popular antidote to kleptocracy is an anti-business culture, but business is the engine by which humankind advances. We need servant businesses. Milton Friedman got it wrong.
It’s time to restore business to the customers, i.e., the People. The premise that business serves the People is the rationale for limited liability. We dare not squander that privilege. Reform can begin with Brookdale, empowering people where they live and work. Let’s make Brookdale a paradigm for the future, not a paradigm for oligarchic enrichment.
