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CATALYST EQUITY RESEARCH REPORT ™ Weekly Research Highlighting Activist Investments
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Hedge Fund Solutions, LLC © 2003 – 2016 Page 2 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
HIGHLIGHTING ACTIVIST INVESTMENTST
Week Ending October 21, 2016
SYMBOL COMPANY INVESTOR
ACW Accuride Corp Coliseum Capital
AHP Ashford Hospitality Prime Sessa Capital
CDI CDI Corp Radoff/Schechter
CYAN Cyanotech Corp Meridian OHC Partners
DEPO DepoMed Starboard Value
ESL Esterline Technologies First Pacific Advisors
FARM Farmer Brothers Co Richard Farmer
FRGI Fiesta Restaurant Group JCP/Bandera/Radoff/Schechter
FTF Franklin Lmt. Duration Trust Saba Capital
FVE Five Star Quality Care Senior Star Management
MFRI MFRI, Inc. Carl Dinger
NYRT New York REIT, Inc. WW Investors
REED Reed’s, Inc. Committee to Rescue Reed’s
STC Stewart information Services Starboard Value
HEDGE FUND SOLUTIONS (HFS) provides investment research, strategy and stakeholder communications consulting to companies and
investors interested in, or involved with, shareholder activist campaigns. Since 2001 HFS has become the trusted advisor to numerous
institutional investors, CEOs and board members worldwide. HFS also administers The Official Activist Investing Blog™, the definitive source for activist shareholder information.
Catalyst Investment Research™ is a portfolio of activist investing research products that combine company-specific shareholder activism research with deep value investment analysis and access to industry insiders.
HEDGE FUND SOLUTIONS’ PORTFOLIO OF ACTIVIST INVESTING RESEARCH INCLUDES:
Daily Email Alerts
Weekly Summary of Activist Investments
Quarterly Buying Analysis of Top 50 Activist Investors
Company-Specific Shareholder Activism Analysis (combining shareholder activism & deep value company analysis)
Special Reports on Activist Investing
400+ Page Shareholder Activism Report & Regularly Updated Shareholder Activism Resource Portal
To Learn More: Download a brochure http://www.hedgerelations.com/CIR/CIR%20Brochure.pdf
Hedge Fund Solutions, LLC © 2003 – 2016 Page 3 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
Accuride Corp. (ACW)
Activist Investor: Coliseum Capital
Investor Info Catalyst Info
Shares 9,176,694 Catalyst: On October 21, 2016 Coliseum Capital issued a press release urging stockholders to vote against Crestview
Partners' proposed merger with ACW
https://www.sec.gov/Archives/edgar/data/817979/000089534516000573/wddfan14a-accuride_coliseum.htm
Comment: We initially covered ACW on December 20, 2012 when the company appointed one representative from Cetus
Capital (14.68% shareholder at the time) to board.
On May 25, 2016 Coliseum Capital changed its filing status from "passive" to "active" and disclosed it owns
52.5M of the company's 9.5% first lien bonds
On October 6, 2016 Coliseum Capital issued a press release stating that the proposed sale of the company for
$2.58/share undervalues the business, is the wrong strategic choice, and is not in the best interest of
shareholders https://www.sec.gov/Archives/edgar/data/817979/000089534516000557/ex-2_accuride.htm
% Outstanding 19.0%
Cost Basis 2.86
Company Info
Share Price 2.49
Revenue 641M
Market Cap 120M
Enterprise Value 408M
Net Cash -288M
EBITDA 70M
52 wk. range 0.74 – 3.19
EV/EBITDA 6.0
Continue to Next Page
Hedge Fund Solutions, LLC © 2003 – 2016 Page 4 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
Ashford Hospitality Prime (AHP)
Activist Investor: Raging Capital
Investor Info Catalyst Info
Shares 2,210,427 Catalyst: On October 17, 2016 Sessa reported reducing its ownership from 9.1% to 8.6% in anticipation of the Company
repurchasing shares (AHP's articles of incorporation limit ownership to 9.8%). Sessa also disclosed that AHP's
Chairman/CEO intends to bring a defamation suit against Sessa for statements made during the proxy contest.
Comment: We initially covered AHP on September 2, 2014 when Sessa Capital sent a letter to the board expressing
concern about the board's historical approval of shareholder un-friendly actions and requested they disclose
the possible termination fee payable to the company's advisor (an entity associated with the company's
chairman) in the event of a sale.
On December 10, 2015 Sessa Capital sent a letter to AHP expressing continued concern over the handling of
AHP's strategic alternatives review, including the outsized termination fee. On January 7, 2016 Sessa Capital
sent a letter to AHP stating that they now believe that a sale of the company is the preferred outcome of the
company's previously announced strategic alternatives process. On January 14, 2016 Sessa Capital nominated
five people to take control of AHP's board. On February 2, 2016 Sessa Capital commented on ASP's sale of
13.3% voting rights to the Company's Chairman, Chairman's father and others, stating, "when faced with a
proxy fight, Ashford Prime’s incumbent directors sold nearly 13.3% of the Company’s voting stock to a group
of predominantly insiders for $43,750. On February 4, 2016 Sessa Capital announced it is suing AHP over the
Company's recent issuance of stock to insiders during its proxy contest. On February 16, 2016 Sessa Capital
issued a press release and sent a letter to the NYSE protesting potential violations of NYSE rules by AHP
relating to the Company's announced sale of up to 13.3% of AHP's voting interest.
On February 29 Rambleside Holdings issued two letters advocating for the company to examine strategic
alternatives. https://finance.yahoo.com/news/rambleside-calls-ashford-hospitality-trust-120000613.html
On April 14, 2016 Sessa Capital issued a letter to shareholders seeking support for its five director candidates.
On April 20, 2016 the Weisman Group disclosed a 5.24% "active" stake at an avg. $12.68/share and
announced it may discuss taking the company private with management.
On May 10, 2016 Sessa Capital issued a press release highlighting AHP's corporate governance weakness and
urged shareholders to support its five director candidates. On May 23, 2016 AHP announced a federal court
has disqualified Sessa's nominees as unable to run for election. On May 31 AHP sent a letter to Sessa Capital
announcing it is still receptive to a settlement
On June 8, 2016 AHP received an unsolicited proposal from The Weisman Group for $20.25/share for the
common stock and $25/share for the preferred
On June 14, 2016 Sessa Capital issued a press release stating that "Despite running in an uncontested election
as a result of the board’s decision to disqualify Sessa Capital’s nominees, Ashford Prime’s entire board
received an unprecedented rebuke in which not a single director was affirmatively chosen by shareholders to
retain his or her seat." Sessa Capital intends to seek a new election.
On July 1, 2016 AHP filed a motion for contempt against Sessa for issuing two press releases urging
shareholders to withhold their votes for directors after a Texas Court enjoined the investment firm from
soliciting shareholders for its 2016 annual meeting. As of August 31, 2016 Sessa's ownership has increased
from 8.2% to 9.1% as a result of share repurchases. Sessa continues to express concern about the company's
governance, including several "flawed" changes the company recently made to (i) the separation of Chair/CEO
and (ii) the adoption of a majority vote standard.
On October 6, 2016 Raging Capital disclosed a 7.9% position and said they have met with management and the
board on October 4 to discuss ways to enhance shareholder value.
Legal counsel to Raging Capital
Proxy Solicitor to Sessa Capital
% Outstanding 8.6%
Cost Basis Not Avail
Company Info
Share Price 13.67
Revenue 387M
Market Cap 416M
Enterprise Value 985M
Net Cash -640M
EBITDA 82M
52 wk. range 8.37 – 17.64
EV/EBITDA 12.1
Hedge Fund Solutions, LLC © 2003 – 2016 Page 5 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
CDI Corp. (CDI)
Activist Investor: Radoff/Schechter
Investor Info Catalyst Info
Shares 1,353,372 Catalyst: Radoff/Schechter increased their ownership to 7.3%
Comment: We initially covered CDI on September 28, 2016 when Radoff/Schechter disclosed a 6% ownership stake and
announced they have been communicating with the board about corporate governance and strategy.
Legal counsel to Radoff/Schechter
% Outstanding 7.3%
Cost Basis 5.51
Company Info
Share Price 6.25
Revenue 941M
Market Cap 116M
Enterprise Value 136M
Net Cash -20M
EBITDA -2M
52 wk. range 4.31 – 8.81
EV/EBITDA Negative
Cyanotech Corp. (CYAN)
Activist Investor: Meridian OHC Partners
Investor Info Catalyst Info
Shares 749,610 Catalyst: Meridian provided more background on its governance concerns regarding CYAN's Chairman and its two
largest shareholders
https://www.sec.gov/Archives/edgar/data/768408/000144586616002761/meridian13d10182016.htm
Comment: We initially covered CYAN on May 10, 2016 when Meridian disclosed a 12.94% "active" stake and expressed
its concern about the company's recent announcement to replace the CEO and potential change in strategy.
Meridian expressed disappointment in CYAN's Chairman and urged the other board members to "out-vote" him
on matters considered by the board.
On May 25, 2016 Meridian announced it had filed a derivative action against the company claiming that the
chairman breached his fiduciary duty.
https://drive.google.com/open?id=0B8MjSICzQPrKaEZrTEtHdXQtQUU
On July 26, 2016 Meridian expressed concern about CYAN re-nominating a director even though he has been
accused of improprieties.
https://www.sec.gov/Archives/edgar/data/768408/000144586616002404/meridian13d05252016.htm
On October 6, 2016 Meridian highlighted a number of securities reporting deficiencies between CYAN's
chairman (who owns 19.5%) and the Rudolph Steiner Foundation (RSF) who owns another 13.5%, claiming
the two parties have been acting as an undisclosed "group".
% Outstanding 13.3%
Cost Basis Not Avail
Company Info
Share Price 3.75
Revenue 32M
Market Cap 21M
Enterprise Value 27M
Net Cash -6M
EBITDA 1M
52 wk. range 3.32 – 6.14
EV/EBITDA 21.4
Continue to Next Page
Hedge Fund Solutions, LLC © 2003 – 2016 Page 6 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
DepoMed Inc. (DEPO)
Activist Investor: Starboard Value Fund
Investor Info Catalyst Info
Shares 6,015,000 Catalyst: On October 19, 2016 DEPO entered into a settlement agreement with Starboard to appoint three new directors.
https://www.sec.gov/Archives/edgar/data/1005201/000092189516005889/ex991to13da506297185_101916.htm
Comment: We initially covered DEPO on July 7, 2014 when Horizon Pharma offered $29.25/share for DEPO
On July 21, 2014 Horizon increased its offer to $33/share (valued approx. $2B in stock and cash) and said
DEPO indicated it would be more willing to discuss a deal at that price
On September 14, 2014 DEPO rejected Horizon's increased $2.4B offer
On August 3, 2015 Horizon announced plans to remove and replace DEPO’s directors through two special
meetings
On September 24, 2015 Horizon Pharma reminded shareholders that the Sept. 30 special meeting to remove
directors is fast approaching and disclosed a presentation outlining the benefits and considerations for
combining the two companies.
http://www.sec.gov/Archives/edgar/data/1005201/000119312515327920/d169393ddfan14a.htm
DEPO disputed the offer price, stating that the all-stock offer has a current value (as of Sept. 25, 2015) of
$21.64, not $33/share.
On April 7, 2016 Starboard disclosed a 9.8% "active" economic stake in DEPO (through stock (6.8%) and
cash-settled swaps) challenging the company on its plans to reincorporate from CA to DE, which effectively
removes several shareholder rights to call a special meeting. Starboard initiated a process to call a special
meeting to replace directors and issued a press release outlining its reasons why.
http://www.sec.gov/Archives/edgar/data/1005201/000092189516004070/dfan14a06297185_04082016.htm
On May 3, 2016 Starboard presented several slides on DEPO at an investment conference highlighting the
potential value of DEPO to an acquirer.
http://www.sec.gov/Archives/edgar/data/1005201/000092189516004338/ex991dfan14a06297185_050416.pdf
On May 26 Starboard demanded DEPO call a special meeting of shareholders to remove and replace six board
members.
http://www.sec.gov/Archives/edgar/data/1005201/000092189516004689/dfan14a06297185_05262016.htm
On July 26, 2016 Starboard sent a letter to shareholders announcing the appointment of two new
Pharmaceutical Executive advisors, who will join Starboard's director slate at a special meeting to elect
directors.
https://www.sec.gov/Archives/edgar/data/1005201/000092189516005229/dfan14a06297185_07262016.htm
On September 19, 2016 Starboard delivered a letter to DEPO demanding they set a special meeting date (which
the company subsequently announced is Nov 15) and issued a letter to shareholder reiterating its belief that a
new board is required to represent the best interests of stockholders.
https://www.sec.gov/Archives/edgar/data/1005201/000092189516005723/dfan14a06297185_09192016.htm
Legal counsel to Starboard Value
Proxy Solicitor to Horizon Pharma
% Outstanding 9.8%
Cost Basis 15.06
Company Info
Share Price 23.74
Revenue 437M
Market Cap 1.5B
Enterprise Value 2.1B
Net Cash -592M
EBITDA 139M
52 wk. range 12.25 – 27.02
EV/EBITDA 14.9
Hedge Fund Solutions, LLC © 2003 – 2016 Page 7 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
Esterline Technologies (ESL)
Activist Investor: First Pacific Advisors
Investor Info Catalyst Info
Shares 3,690,744 Catalyst: On October 19, 2016 ESL entered into a settlement agreement with First Pacific to add one new director.
https://www.sec.gov/Archives/edgar/data/33619/000119312516741068/d273062dex991.htm
Comment: We initially covered ESL on May 25, 2012 when Relational Investors disclosed a 6.6% "active" stake and
stated operational improvements may improve value but will fall short of the value of a sale
On December 12, 2012 ESL increased its board size from 9 to 11 and added 2 reps from Relational (Relational
no longer owns ESL)
On June 27, 2016 First Pacific Advisors changed its filing status from "passive" to "active" with a 12.6%
ownership position and announced it has been in conversations with the board and management regarding
board composition, business operations and strategic alternatives to promote long-term value.
On September 28, 2016 First Pacific Advisors agreed not to acquire additional shares of ESL until October 12,
2016 and will continue discussions regarding certain governance matters
https://www.sec.gov/Archives/edgar/data/33619/000119312516723631/d268121dex991.htm
% Outstanding 12.6%
Cost Basis Not Avail
Company Info
Share Price 74.00
Revenue 1.9B
Market Cap 2.2B
Enterprise Value 2.9B
Net Cash -637M
EBITDA 232M
52 wk. range 45.12 – 96.44
EV/EBITDA 12.3
Farmer Brothers Co. (FARM)
Activist Investor: Richard Farmer
Investor Info Catalyst Info
Shares 2,817,018 Catalyst: Richard Farmer (a co-trustee of the Farmer Family Trust with Carol Farmer) announced he has not authorized
the co-trustees of the Family trust to vote the shares held by Family Trust at the annual meeting and disclosed
his support for the Company's director nominees
Comment: We initially covered FARM on August 29, 2016 when Carol Farmer (23% shareholder through personal
ownership and as co-trustee of the Farmer Family Trust) sent a letter to the board expressing deep concern
about the company's CEO, the board's refusal to have a dialogue, management poor track record of value
creation, management's poor operating performance, management's poor capital allocation decisions, and the
board's numerous corporate governance shortfalls.
https://www.sec.gov/Archives/edgar/data/34563/000119380516003861/e615356_99-1.htm
On September 8, 2016 Carol Farmer nominated three individuals for election to the board.
On September 29, 2016 "Save Farmer Bros." issued a presentation seeking support for its three nominees
https://www.sec.gov/Archives/edgar/data/34563/000092189516005786/ex1todfan14a10901002_092916.pdf
Legal counsel to Carol Farmer
% Outstanding 16.8%
Cost Basis Not Avail
Company Info
Share Price 31.14
Revenue 544M
Market Cap 516M
Enterprise Value 466M
Net Cash 45M
EBITDA 37M
52 wk. range 24.04 – 36.96
EV/EBITDA 12.6
Hedge Fund Solutions, LLC © 2003 – 2016 Page 8 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
Fiesta Restaurant Group (FRGI)
Activist Investor: JCP; Bandera; Radoff; Schechter (the “Investment Group”)
Investor Info Catalyst Info
Shares 1,665,121 Catalyst: FRGI sent a response to the Investors' request to settle a potential proxy contest by adding two new directors
and the declassification of the board. In the letter, FRGI said that entering into any settlement negotiations at
this time is inappropriate.
https://www.sec.gov/Archives/edgar/data/1461945/000119380516004114/e615492_ex99-1.pdf
Comment: We initially covered FRGI on September 16, 2016 when several investment funds formed a group with an
aggregate 6.2% ownership and disclosed their belief that significant operational and strategic opportunities
are available to enhance value.
Legal counsel to the Investment Group
% Outstanding 6.2%
Cost Basis Not Avail
Company Info
Share Price 27.33
Revenue 710M
Market Cap 729M
Enterprise Value 792M
Net Cash -67M
EBITDA 95M
52 wk. range 20.15 – 40.74
EV/EBITDA 8.4
Franklin Limited Duration Income Trust (FTF)
Activist Investor: Saba Capital
Investor Info Catalyst Info
Shares 4,032,405 Catalyst: On October 17, 2016 Saba issued a letter to FTF shareholders stating that failure to support Saba's proposal and
the election of its three candidates will result in shareholder losing a significant amount of money.
On October 20, 2016 Saba announced ISS has recommended FTF shareholders vote "For" Saba's nominees
https://www.sec.gov/Archives/edgar/data/1233087/000090266416008468/p16-1991dfan14a.htm
Comment: We initially covered FTF on March 4, 2016 when Saba Capital increased its ownership from a "passive" 9% to
an "active" 14.5%.
On April 20, 2016 Saba Capital sent a shareholder proposal to FTF requesting that the Board consider
authorizing a self-tender for all outstanding shares at or close to net asset value; provided, however, if more
than 50% of the outstanding shares are submitted for tender, the tender offer should be cancelled and the
company should be liquidated or converted into an open-end mutual fund.
http://www.sec.gov/Archives/edgar/data/1233087/000090266416006780/p16-1112exhibit2.htm
On May 17, 2016 Saba Capital nominated three candidates for election to the board
Saba Capital issued a presentation it gave to ISS seeking support for its two director candidates
https://www.sec.gov/Archives/edgar/data/1233087/000090266416008312/p16-1917dfan14a.htm
Legal counsel to Saba Capital
% Outstanding 15.03%
Cost Basis 11.52
Company Info
Share Price 12.38
Revenue Not Avail
Market Cap 332M
Enterprise Value Not Avail
Net Cash Not Avail
EBITDA Not Avail
52 wk. range 10.11 – 12.41
EV/EBITDA Not Avail
Hedge Fund Solutions, LLC © 2003 – 2016 Page 9 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
Five Star Quality Care, Inc. (FVE)
Activist Investor: William Thomas (Senior Star Management)
Investor Info Catalyst Info
Shares 3,360,000 Catalyst: On October 17, 2016 Senior Star Management announced its intention to commence a tender offer for up to
10M shares at $3.45/share. Senior Star also delivered a written request to the Company in order to provide
required information for nominating directors to the board at the 2017 annual meeting.
Comment: We initially covered FVE on July 25, 2016 when William Thomas (Senior Star Management Company) sent a
letter to FVE shareholders expressing concern about board independence, recent transactions and management
fees. https://www.sec.gov/Archives/edgar/data/1159281/000101143816000527/exhibit_99-1.htm
Legal counsel to the Senior Star
% Outstanding 6.8%
Cost Basis Not Avail
Company Info
Share Price 2.93
Revenue 1.1B
Market Cap 145M
Enterprise Value 138M
Net Cash 8M
EBITDA 33M
52 wk. range 1.65 – 3.98
EV/EBITDA 4.2
MFRI, Inc. (MFRI)
Activist Investor: Carl Dinger
Investor Info Catalyst Info
Shares 424,127 Catalyst: Dinger disclosed a 5.63% "active" stake in MFRI and announced he has become disenfranchised with the stock
price performance and that the company should be sold.
% Outstanding 5.63%
Cost Basis Not Avail
Company Info
Share Price 8.15
Revenue 123M
Market Cap 61M
Enterprise Value 62M
Net Cash -1M
EBITDA 10M
52 wk. range 4.84 – 8.37
EV/EBITDA 6.4
Continue to Next Page
Hedge Fund Solutions, LLC © 2003 – 2016 Page 10 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
New York REIT, Inc. (NYRT)
Activist Investor: WW Investors
Investor Info Catalyst Info
Shares Not Avail Catalyst: NYRT entered into a settlement with WW Investors to add three new directors and to opt out of the MD
Unsolicited Takeover Act https://finance.yahoo.com/news/york-reit-reaches-settlement-ww-100000355.html
Comment: We initially covered NYRT on June 20, 2016 when WW Investors issued a shareholder presentation outlining
the reasons why they intend to vote against the proposed all-stock combination with JBG Properties. WW
Investors also announced plans to nominate a slate of directors to replace the current Board.
https://www.sec.gov/Archives/edgar/data/1474464/000092189516004982/ex1todfan14a10982002_062016.pdf
On June 27, 2016 WW Investors nominated five candidates for election to the board of NYRT
https://www.sec.gov/Archives/edgar/data/1474464/000092189516005009/dfan14a10982002_06272016.htm
On June 29, 2016 WW Investors launched a website to support its campaign to elect 5 new directors
www.stockholderdocs.com/wwi-nyrt
On July 26, 2016 WW Investors issued a shareholder presentation seeking support to defeat the merger with
JBG Properties
https://www.sec.gov/Archives/edgar/data/1474464/000092189516005230/ex1dfan14a10982002_07262016.pdf
On August 29, 2016 WW Investors issued a press release demanding that the company give stockholders an
opportunity to approve a liquidation plan and vote on the election of directors to oversee the liquidation
process without delay.
https://www.sec.gov/Archives/edgar/data/1474464/000092189516005602/dfan14a10982002_08292016.htm
On September 26, 2016 WW Investors issued a letter to NYRT's Chairman outlining the breakdown in the
process to resolve their dispute
https://www.sec.gov/Archives/edgar/data/1474464/000092189516005755/dfan14a10982002_09262016.htm
On September 29, 2016 WW Investors issued a press release expressing disappointment in NYRT's failure to
hold Director elections at the upcoming special meeting and announced plans to submit a proposal to manage
NYRT's liquidation process.
https://www.sec.gov/Archives/edgar/data/1474464/000092189516005788/dfan14a10982002_09292016.htm
On October 4, 2016 WW Investors (<1% shareholder) delivered a proposal to NYRT to manage the Company
during liquidation or on an ongoing basis if the liquidation is not approved.
https://www.sec.gov/Archives/edgar/data/1474464/000092189516005799/dfan14a10982002_10042016.htm
On October 7, 2016 Bulldog sent a letter to NYRT's Chairman supporting the action to hold an annual meeting
to elect directors at the company's special meeting to vote on the Fund's liquidation.
Proxy Solicitor to WW Investors
% Outstanding <1%
Cost Basis Not Avail
Company Info
Share Price 9.74
Revenue 181M
Market Cap 1.6B
Enterprise Value 2.4B
Net Cash -762M
EBITDA 67M
52 wk. range 8.79 – 11.90
EV/EBITDA 35.8
Continue to Next Page
Hedge Fund Solutions, LLC © 2003 – 2016 Page 11 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
Reed’s (REED)
Activist Investor: Committee to Rescue Reed’s
Investor Info Catalyst Info
Shares 894,284 Catalyst: The Committee to Rescue Reed's added a former Board member of REED to its investment group as it attempts
to elect five new directors
Comment: We initially covered REED on August 24, 2016 when The Committee to Rescue Reed's nominated five
candidates for election to the board. On October 11, 2016 the "Committee" issued a press release expressing
disappointment in the stalled process to settle the proxy contest.
https://www.sec.gov/Archives/edgar/data/1140215/000092189516005852/dfan14a11030002_10112016.htm
Legal counsel to the Committee to Rescue Reed’s
% Outstanding 6.4%
Cost Basis 2.43
Company Info
Share Price 4.15
Revenue 46M
Market Cap 58M
Enterprise Value 69M
Net Cash -11M
EBITDA -1M
52 wk. range 2.25 – 6.91
EV/EBITDA Negative
Stewart Information Services (STC)
Activist Investor: Starboard Value
Investor Info Catalyst Info
Shares 2,315,000 Catalyst: STC entered into an agreement with Starboard to appoint two new directors and retain a search firm to search
for two new directors. https://www.sec.gov/Archives/edgar/data/94344/000157104916018858/t1602462_ex10-
1.htm. As a result, Foundation AM (5.6%) agreed to withdraw its consent solicitation.
https://www.sec.gov/Archives/edgar/data/94344/000092189516005881/ex991to13da1009647003_101716.pdf
Comment: We initially covered STC in on December 4, 2013 when Foundation Asset Management changed its filing status
from “passive” to “active” with a 5.7% ownership
On January 21, 2014 Foundation AM formed an investment group with Engine Capital and announced plans to
seek board representation. On February 12 STC entered into a settlement agreement with Foundation AM and
Engine Capital (together owning 8.5% for $28.49/sh). Under the terms of the agreement STC nominated two
new directors. STC also announced plans for $25M in cost reductions and a $70M share repurchase.
On February 26, 2015 Bulldog disclosed a 5% stake and said the company should eliminate the class B stock,
elect new directors and sell the business; Bulldog also nominated five candidates to the board.
http://www.sec.gov/Archives/edgar/data/94344/000150430415000017/EX-99.pdf
On March 12 Foundation AM sent a letter to the board highlighting why the company is undervalued and
encouraging the board to negotiate a settlement with Bulldog.
On March 30, 2015 STC entered into a settlement with Bulldog Investors (5.0%) to appoint one new director
and submit a proposal to convert the class B stock into common; Foundation AM (7.3%) supports the
agreement http://www.sec.gov/Archives/edgar/data/94344/000119312515109090/d899868dex101.htm
On June 14, 2016 Foundation issued a presentation to STC's Board explaining that the company remains
undervalued, undermanaged and underperforming its peers after four years of restructuring. Foundation
outlined the potential value creation available through an immediate sale of the business.
http://www.sec.gov/Archives/edgar/data/94344/000092189516004937/ex991to13da809647003_061416.pdf
On July 29, 2016 Foundation AM announced it is seeking to call a special meeting to replace two directors.
On August 8, 2016 Starboard disclosed a 9.9% "active" stake in STC
Legal counsel to Foundation Asset/Engine Capital
% Outstanding 9.9%
Cost Basis Not Avail
Company Info
Share Price 45.00
Revenue 2.0B
Market Cap 1.1B
Enterprise Value 974M
Net Cash 71M
EBITDA 128M
52 wk. range 30.34 – 48.60
EV/EBITDA 7.6
Hedge Fund Solutions, LLC © 2003 – 2016 Page 12 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
CONTACT INFORMATION:
Hedge Fund Solutions, LLC
Damien J. Park
Tel. +1 215.325.0514
dpark@hedgerelations.com
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“Companies”). The Firm may also actively trade in the securities of the Companies for its own account. At
any time, the Firm, funds it manages and/or its employees or their family members may have a long or short
position in registered or non-registered securities or in options on any such security of any company mentioned in this report.
The information contained in this report is not a complete analysis of every material fact with respect to the company, industry, or security and is not an offer or solicitation to buy or sell any security. Although
opinions and estimates expressed in this report reflect the current judgment of the Firm, the information
upon which such opinions and estimates are based is not necessarily updated on a regular basis. In addition, opinions are subject to change without notice. The Firm from time to time may perform consulting services
for companies mentioned in this report and may occasionally possess material, nonpublic information
regarding such companies. This information is not used in the preparation of this report. Facts and other information contained in this report have been obtained from the public sources considered reliable but are
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Hedge Fund Solutions, LLC © 2003 – 2016 Page 13 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
PLATINUM SPONSORS – Legal Advisers
Olshan Frome Wolosky LLP is a law firm dedicated to providing personal service tailored to the specific
requirements and concerns of the firm’s clients. Olshan is widely recognized as a preeminent law firm in the activist
strategy area, and represents experienced activist investors, funds new to the activist area, as well as other
investment and hedge funds. Olshan has extensive experience advising clients in a wide range of activist strategies,
from private negotiations with management to public, high profile proxy contests, including expertly and efficiently
handling litigation relating to activist matters. We also specialize in mergers and acquisitions and hostile takeovers,
with extensive expertise in these matters. Olshan’s highly regarded attorneys provide a full range of legal services
and are uniquely positioned to provide expert advice regarding the complicated and nuanced legal issues facing
activist investors today.
Contact:
Steve Wolosky, Partner
Email: swolosky@olshanlaw.com
Tel: +1 212.451.2333
Schulte Roth & Zabel LLP (SRZ), renowned for its shareholder activism practice, has served as longtime counsel
to influential activists and has been involved in some of the highest-profile campaigns facing the business world in
recent years. With over 375 lawyers in offices in New York, Washington, D.C., and London, SRZ has a long history
of serving private equity and hedge fund clients. In 2014, SRZ expanded its shareholder activism practice into the
United Kingdom, where the firm has had a London office since 2002. Serving both activist-only and occasional
activists, the firm has unparalleled expertise in the applicable corporate laws, securities laws and proxy rules on both
sides of the Atlantic. SRZ lawyers also handle investigations and litigations arising out of activists' activities.
Contact:
Marc Weingarten, Partner and Co-chair of SRZ's global Shareholder Activism Group
Email: marc.weingarten@srz.com
Tel: +1 212.756.2280
Eleazer Klein, Partner and Co-chair of SRZ's global Shareholder Activism Group
Email: eleazer.klein@srz.com
Tel: +1 212.756.2376
Hedge Fund Solutions, LLC © 2003 – 2016 Page 14 of 14
HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
PLATINUM SPONSORS – Proxy Advisors
Innisfree M&A Incorporated is a full service proxy solicitation/investor relations firm providing clients with
sound tactical and strategic advice and results-oriented implementation in proxy and consent solicitations (whether
friendly or contested), tender and exchange offers, mergers, rights offerings, strategic restructurings and other
domestic and cross-border transactions requiring action by public security-holders. We provide expert consulting
services on a wide range of matters, including executive compensation proposals, corporate governance issues and
investor relations.
Innisfree’s reputation derives from our success in complex and/or contested situations. Key to that success is our
ability to track, identify and understand the shifting dynamics of a company’s security-holder base and provide
battle-tested advice based on that information. We are convinced, and our unrivaled record demonstrates, that this
refined, analytical based approach enables us to deliver the extraordinary results our clients expect.
Contact:
Arthur Crozier, Co-Chairman
Email: acrozier@innisfreema.com
Tel: +1 212.750.5837
MacKenzie Partners, Inc. is a full-service proxy solicitation, investor relations and corporate governance
consulting firm specializing in mergers-and-acquisitions related transactions. The firm has offices in New York
City, Los Angeles, Palo Alto and London.
MacKenzie's services include corporate governance consulting, security holder solicitations, information agent
services for tender and exchange offers, beneficial ownership identification, market surveillance and associated
financial, investor and media relations services. We work in close partnership with our client's attorneys, investment
bankers and other consultants, providing advice and counsel at each stage of the transaction.
Contact:
Lawrence Dennedy, President
Email: ldennedy@mackenziepartners.com
Tel: +1 212.929.5239
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