UPDATE 1-Proxy adviser ISS backs one of Ancora's board nominees at Blucora

(Recasts to reflect ISS recommendation)

BOSTON, April 9 (Reuters) - Proxy adviser Institutional Shareholder Services (ISS) on Friday said Blucora Inc shareholders should vote for one of Ancora Holdings Inc’s four nominees for the Blucora board after the activist investor urged the company to explore strategic alternatives for the tax services business.

“The merits of the issues raised by the dissident lead to a conclusion that change is warranted, specifically in the form of direct shareholder representation in the boardroom,” ISS analysts wrote.

ISS urges shareholders to vote for Frederick DiSanto, who is chairman and CEO of Cleveland-based Ancora, arguing he is the only one of Ancora’s four proposed candidates who has experience serving on a public board.

Ancora owns a 3% stake in Irving, Texas-based Blucora and has urged the company to consider alternatives for its tax services business, including a sale.

The ISS recommendation stands in contrast to a separate recommendation from smaller rival proxy adviser Glass, Lewis and Co, which said on Friday that shareholders should back the company’s nominees and reject the dissident’s directors.

These types of recommendations often guide investors on critical votes for directors or mergers.

Glass, Lewis said earlier on Friday that the Ancora candidates “do not clearly offer what we consider to be a superior alternative to the status quo.”

ISS meanwhile noted that Ancora should have a voice, in part because its 3.4% stake in Blucora is more than twice that of the board and management combined. The report said Ancora has identified critical issues at the company and presented a solution, adding the company does not appear to have a plan for its net operating loss assets and has a mixed history of meeting acquisition projections.

But ISS also said it is not clear whether Ancora’s preferred solution - exploring a sale of its TaxAct unit - is the best fix, or that the time is right to pursue a sale. (Reporting by Svea Herbst-Bayliss in Boston Editing by Toby Chopra and Matthew Lewis)