SCHEDULE: Activist Investor Fund 1 Takes 9.96% Stake in Funko

Sentiment:

Activist Stake Disclosure 19 February 2026 7:36 PM

Fund 1 Investments, LLC has disclosed a 9.96% stake in Funko, Inc., advocating for a strategic alternatives process to maximize shareholder value.

Summary

Fund 1 Investments, LLC has acquired 5,450,251 shares of Funko, Inc. Class A Common Stock, representing approximately 9.96% of the outstanding shares.
The aggregate purchase price for these shares was approximately $45,601,321, including brokerage commissions.
Fund 1 Investments believes Funko's shares were undervalued and represented an attractive investment opportunity when purchased.
The Reporting Person intends to engage with Funko's Board of Directors and management team regarding operational and strategic opportunities to enhance stockholder value.
Fund 1 Investments advocates for the immediate commencement of a robust and comprehensive strategic alternatives process, actively marketed to both strategic and financial acquirors.
The Reporting Person also holds cash-settled total return swaps providing economic exposure to an additional 1,225,392 notional shares (approximately 2.24% of outstanding shares) and various cash-settled call options with exercise prices of $4.00 and $5.00 expiring through May 11, 2026.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive development for Funko shareholders, as an experienced activist investor is pushing for strategic changes that could unlock significant value, potentially through a sale of the company.

Positives

Fund 1 Investments views Funko's shares as undervalued, suggesting potential for appreciation if strategic changes are implemented.
The activist investor intends to push for strategic changes that could unlock shareholder value, potentially through a sale of the company.
Fund 1 Investments has a stated track record of successful take-private transactions, which could be a positive signal for Funko shareholders if a sale process is initiated.

Negatives

The filing implies dissatisfaction with current management or strategic direction, as an activist investor is pushing for a 'robust and comprehensive strategic alternatives process.'
The need for an activist investor to push for a strategic review could indicate underlying issues or underperformance at Funko.

Risks

The Issuer's shares may continue to be undervalued if the proposed strategic alternatives process does not yield favorable results or is not initiated.
There is no guarantee that discussions with the Board and management will lead to the desired strategic changes or a sale of the company.
Market conditions, general economic and industry conditions, and the Issuer's financial performance could negatively impact the investment.
The Reporting Person may increase or decrease its position in the Issuer, which could create volatility in the stock price.

Future Outlook

Fund 1 Investments, LLC intends to engage with Funko's Board and management to discuss operational and strategic opportunities to enhance stockholder value. They believe the best path to maximizing value is the immediate commencement of a robust and comprehensive strategic alternatives process, actively marketed to both strategic and financial acquirors. The Reporting Person may also adjust its investment position in Funko based on various factors, including the Issuer's financial position, results and strategic direction, actions taken by management and the Board, price levels of the Shares, market conditions, and other investment opportunities.

Management Comments

"The Reporting Person purchased the Shares based on the Reporting Person's belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity."
"The Reporting Person intends to engage in discussions with the Issuer's board of directors (the 'Board') and management team regarding operational and strategic opportunities for the Issuer to enhance stockholder value."
"The Reporting Person believes that the best path to maximizing value for the Issuer and its shareholders is the immediate commencement of a robust and comprehensive strategic alternatives process, actively marketed to both strategic and financial acquirors."
"The Reporting Person stands ready to participate in any such process and believes it is uniquely positioned to do so, having demonstrated a successful track record in executing take-private transactions -including L'Occitane (completed October 2024) and Tile Shop Holdings (completed December 2025) -and having participated as a credible, committed counterparty in numerous other sale processes in recent years."
"The Reporting Person intends to communicate these views directly to the Board and urges the Board to act promptly in the best interests of all shareholders."

Industry Context

StockSavvy.ai notes that activist investor stakes often emerge in sectors where companies are perceived to be underperforming relative to their potential or where strategic assets are undervalued. Funko, a company known for its pop culture collectibles, operates in a consumer discretionary segment that can be sensitive to economic cycles and evolving consumer tastes. An activist push for a strategic review suggests that Fund 1 Investments sees significant untapped value, potentially through a sale or a major operational overhaul, which could be a trend in mature or consolidating niche markets.

Comparison to Industry Standards

Fund 1 Investments highlights its successful track record in executing take-private transactions, specifically mentioning L'Occitane (completed October 2024) and Tile Shop Holdings (completed December 2025). These examples serve as benchmarks for their capability to drive value through strategic transactions, suggesting they aim to replicate similar outcomes for Funko.
The activist's call for a 'robust and comprehensive strategic alternatives process' aligns with common practices in situations where investors believe a company's market valuation does not reflect its intrinsic value, often seen in comparison to private market valuations or competitor multiples.

Stakeholder Impact

Shareholders: Potential for increased shareholder value if strategic alternatives are successfully pursued, including a potential sale of the company. Increased scrutiny on management and Board performance.
Management/Board: Increased pressure to consider strategic options and engage with the activist investor. Potential for changes in strategic direction or Board composition.
Employees: A strategic review or potential sale could lead to uncertainty regarding future employment or changes in company culture.
Customers/Suppliers: A change in ownership or strategic direction could impact product offerings, supply chain, or business relationships, though this is speculative at this stage.

Next Steps

Fund 1 Investments will engage in discussions with Funko's Board and management regarding operational and strategic opportunities.
Fund 1 Investments urges the Board to immediately commence a robust and comprehensive strategic alternatives process.
Fund 1 Investments may increase or decrease its position in Funko shares based on various market and company-specific factors.
Fund 1 Investments may engage in further communications with management, the Board, other stockholders, or third parties.
Fund 1 Investments may make recommendations concerning changes to capitalization, ownership structure, Board structure (including Board composition), or suggestions for improving the Issuer's financial and/or operational performance.
Various cash-settled call options held by Fund 1 Investments will expire between February 20, 2026, and May 11, 2026.

Key Dates

Date	Description
October 2024	Completion of L'Occitane take-private transaction by Fund 1 Investments.
November 4, 2025	Date used for calculating outstanding shares (54,742,995) as reported in Funko's Form 10-Q.
November 6, 2025	Date Funko, Inc. filed its quarterly report on Form 10-Q.
December 2025	Completion of Tile Shop Holdings take-private transaction by Fund 1 Investments.
January 21, 2026	Various purchases and sales of Funko common stock by Fund 1 Investments.
January 22, 2026	Various purchases and sales of Funko common stock by Fund 1 Investments.
January 23, 2026	Various purchases of Funko common stock by Fund 1 Investments.
January 26, 2026	Various purchases of Funko common stock by Fund 1 Investments.
January 27, 2026	Purchase of Funko common stock by Fund 1 Investments.
January 28, 2026	Purchase of Funko common stock by Fund 1 Investments.
January 29, 2026	Purchase of Funko common stock by Fund 1 Investments.
January 30, 2026	Purchase of Funko common stock by Fund 1 Investments.
February 3, 2026	Sale of Funko common stock by Fund 1 Investments.
February 19, 2026	Date of event requiring the filing of this Schedule 13D and filing date.
February 20, 2026	Expiration date for cash-settled call options referencing 799,122 shares with an exercise price of $5.00.
February 23, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
February 24, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
February 25, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
February 26, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
February 27, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
March 2, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
March 3, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
March 4, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
March 5, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
March 6, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
March 9, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
March 10, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
March 11, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
March 12, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
March 13, 2026	Expiration date for cash-settled call options referencing 149,122 shares with an exercise price of $5.00.
March 16, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
March 17, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
March 18, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
March 19, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
March 20, 2026	Expiration date for cash-settled call options referencing 500,000 shares with an exercise price of $4.00 and 74,561 shares with an exercise price of $5.00.
March 23, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
March 24, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
March 25, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
March 26, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
March 27, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
March 30, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
March 31, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 1, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 2, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 6, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 7, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 8, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 9, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 10, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 13, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 14, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 15, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 16, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 17, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 20, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 21, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 23, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 24, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 27, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 28, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 29, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
April 30, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
May 1, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
May 4, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
May 5, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
May 6, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
May 7, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
May 8, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.
May 11, 2026	Expiration date for cash-settled call options referencing 74,561 shares with an exercise price of $5.00.

Recommendation

hold

While the activist investor's push for strategic alternatives could unlock value, the outcome is uncertain. The stock may experience volatility as discussions unfold. Investors should hold to see how the company responds to the activist's demands and if a strategic review is initiated, which could lead to a more definitive outlook.

Keywords

Funko, FNKO, Activist Investor, Schedule 13D, Shareholder Value, Strategic Alternatives, Take-Private, Investment Opportunity, Undervalued Stock, Corporate Governance

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