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CATALYST EQUITY RESEARCH REPORT ™ Weekly Research Highlighting Activist Investments
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HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
HIGHLIGHTING ACTIVIST INVESTMENTS Week Ending May 1, 2015
SYMBOL COMPANY INVESTOR
ACY AeroCentury Corp Lee Beaumont ARIA Ariad Pharmaceuticals Sarissa Capital AT Atlantic Power Corporation Mangrove Partners CHSP Chesapeake Lodging Trust UNITE HERE CKSW ClickSoftware Technologies Vector Capital CWST Casella Waste Systems JCP Investment Management DD E.I. du Pont, Inc. Trian Fund Management DHG Deutsche High Income Opps Saba Capital Management EML The Eastern Company Barrington Capital GTE Gran Tierra Energy West Face Capital IMN Imation Corp Clinton Group INAP Internap Corporation RDG Capital KHI Deutsche High Income Trust Saba Capital Management LXU LSB Industries Starboard Value MGM MGM Resorts International Land & Buildings MYE Myers Industries, Inc. GAMCO Investors PERY Perry Ellis International Legion Partners/CalSTRS PICO PICO Holdings River Road Asset Management PLCE The Children’s Place Barington Capital/Macellum Advisors PNK Pinnacle Entertainment Inc. UNITE HERE ROVI Rovi Corporation Engaged Capital SCSS Select Comfort Blue Clay Capital TMST TimkenSteel Corp Elwood Group TPX Tempur-Sealy International H Partners WCC WESCO International Atlantic Investment Management
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.
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HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
AeroCentury Corp (ACY) Activist Investor: Lee Beaumont
Investor Info Catalyst Info Shares 150,000 Catalyst:
On April 29 ISS recommended ACY shareholders vote for Beaumont. http://www.sec.gov/Archives/edgar/data/1036848/000110465915031493/a15-7073_13dfan14a.htm Comment: We initially covered ACY on December 5 when Beaumont proposes to acquire ACY for $12.50 per share in cash. http://www.sec.gov/Archives/edgar/data/1036848/000110465914085088/a14-25726_1ex99d1.htm On December 17 ACY rejected Beaumont’s offer. After having his $12.50/share offer rejected by ACY's board, Beaumont sent a letter saying he is willing to discuss an increased offer before January 14 or he may seek board representation. http://www.sec.gov/Archives/edgar/data/1036848/000110465915002165/a15-2302_1ex99d3.htm On February 11 Beaumont nominated himself to the board of ACY. http://www.sec.gov/Archives/edgar/data/1036848/000110465915008770/a15-4212_1ex99d4.htm On April 21 Beaumont issued a presentation seeking support for his appointment to the board. http://www.sec.gov/Archives/edgar/data/1036848/000110465915029233/a15-7073_11dfan14a.htm On April 23 Beaumont issued a shareholder letter outlining the need for new directors, highlighting the company’s continuing poor performance and excessive fees. http://www.sec.gov/Archives/edgar/data/1036848/000104746915003825/a2224422zdfan14a.htm
% Outstanding 9.7% Cost Basis 14.30 Company Info Share Price 11.21 Revenue 26M Market Cap 17M Enterprise Value 150M Net Cash -130M EBITDA 11M 52 wk. range 7.61 – 18.40 EV/EBITDA 13.9
Ariad Pharmaceuticals (ARIA) Activist Investor: Sarissa Capital
Investor Info Catalyst Info Shares 12,850,000 Catalyst:
On April 28 ARIA entered into a settlement with Sarissa under which the CEO has agreed to retire and a CEO search committee will be chaired by a member of Sarissa; Sarissa's nominee will fill the vacancy on the board created by the CEO's retirement. http://www.sec.gov/Archives/edgar/data/884731/000114036115016731/s13dab.htm Comment: On October 29, 2013 Sarissa Capital disclosed a 6.22% “active” stake in ARIA and disclosed plans to seek board representation. On February 21, 2014 ARIA agreed to appoint 1 rep from Sarissa to the board immediately and 1 additional director in the future approved by Sarissa Sarissa requested a waiver relating to the company's NOL Poison Pill in order to increase its ownership to 9.9%. The request was denied and ARIA claims the public request is a breach under the Feb 2014 standstill agreement. On February 13 we reported that there were rumors that Sarissa will launch a proxy contest before the Feb 25th deadline to nominate directors Sarissa nominated two candidates to the board and demanded any settlement include the CEO's retirement On February 24 Sarissa added a third nominee to its slate
% Outstanding 6.87% Cost Basis 3.75 Company Info Share Price 9.15 Revenue 105M Market Cap 1.7B Enterprise Value 1.6B Net Cash 196M EBITDA -155M 52 wk. range 4.90 – 9.89 EV/EBITDA Negative
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Atlantic Power (AT) Activist Investor: Mangrove Partners
Investor Info Catalyst Info Shares ~9,100,000 Catalyst:
Mangrove Partners is rumored to be pushing AT to pay a special dividend of $300 million, or about $2.50/share, and may nominate directors to the board. http://www.reuters.com/article/2015/04/29/us-atlantic-pw-us-shareholders-idUSKBN0NK23520150429 Comment: We initially covered AT on October 16, 2014 when the Clinton Group sent a letter to the Board calling on them to re-engage in a sale process, after the company announced it will remain independent. Clinton stated, “Given the strength of the auction as we understand it, we believe there is a deal to be achieved at prices above $4.00 per share, or over a 100% premium to yesterday's stock price.” http://www.prnewswire.com/news-releases/clinton-group-calls-on-atlantic-power-to-re-engage-sale-process-279474512.html On November 24 AT entered into a settlement with Clinton to add two new directors to a 7-person board
Legal counsel to Mangrove Partners
Legal counsel to Clinton Group
% Outstanding ~7.5% Cost Basis Not Avail Company Info Share Price 3.28 Revenue 569M Market Cap 398M Enterprise Value 2.0B Net Cash -1.7B EBITDA 194M 52 wk. range 1.91 – 4.15 EV/EBITDA 10.4
Chesapeake Lodging Trust (CHSP) Activist Investor: UNITE HERE
Investor Info Catalyst Info Shares Not Avail Catalyst:
Labor Union UNITE HERE issued a shareholder presentation seeking support for several changes, including: shareholders rights to amend bylaws, ability to vote on the poison pill, lowering standard to remove directors for cause, say on pay for golden parachutes, and removing change in control severance payments. http://www.sec.gov/Archives/edgar/data/1034426/000103442615000053/chsp042715filing.htm
% Outstanding Not Avail Cost Basis Not Avail Company Info Share Price 31.70 Revenue 478M Market Cap 1.9B Enterprise Value 2.3B Net Cash -523M EBITDA 135M 52 wk. range 27.50 – 39.05 EV/EBITDA 16.9
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ClickSoftware Technologies Ltd. (CKSW)
Activist Investor: Vector Capital
Investor Info Catalyst Info Shares 1,928,529 Catalyst:
Francisco Partners agreed to buy CKSW for $12.65/share Comment: We initially covered 10/18/2013 Discovery disclosed a 5.6% "active" stake in CKSW; 3/6/2015 Vector Capital disclosed a 5.93% "active" stake in CKSW
% Outstanding 5.93% Cost Basis 7.29 Company Info Share Price 12.43 Revenue 126M Market Cap 431M Enterprise Value 270M Net Cash 43M EBITDA 0.3M 52 wk. range 6.50 – 12.55 EV/EBITDA 793.1
Casella Waste Systems, Inc. (CWST)
Activist Investor: JCP Investment Management
Investor Info Catalyst Info Shares 1,980,105 Catalyst:
JCP issued a press release announcing plans to elect three new directors to the board and outlined the Company's history of underperformance and poor governance. http://www.sec.gov/Archives/edgar/data/911177/000092189515001070/ex991to13d08569015_04212015.htm
Legal counsel to JCP Partners
% Outstanding 5.0% Cost Basis 5.10 Company Info Share Price 5.45 Revenue 553M Market Cap 223M Enterprise Value 750M Net Cash -533M EBITDA 96M 52 wk. range 3.41 – 6.30 EV/EBITDA 7.8
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E.I. du Pont (DD) Activist Investor: Trian Fund
Investor Info Catalyst Info Shares ~25,000,000 Catalyst:
Trian sent a letter to DD shareholders discussing ISS's recommendation for two of Trian's nominees. http://www.sec.gov/Archives/edgar/data/30554/000093041315002034/c81201_ex1.htm Comment: We initially covered DD on September 16, 2014 when Trian sent a letter/whitepaper to DuPont urging the board to break itself up http://trianwhitepapers.com/ At that time, Dupont issued a press release saying the board is committed to continuing on its strategic plan. http://finance.yahoo.com/news/dupont-statement-regarding-trian-122000658.html On January 8 Trian nominated four candidates for election to the DuPont board and outlined why DuPont is an inefficient conglomerate. http://www.sec.gov/Archives/edgar/data/30554/000093041315000107/c79721_ex1.htm DuPont issued a press release commenting on Trian’s nomination. http://www.sec.gov/Archives/edgar/data/30554/000110465915001374/a15-2040_2defa14a.htm DuPont added two new directors and said it tried to settle with Trian by offering one seat to a Trian nominee other than Nelson Peltz. Trian applauded the additional two board members but said any settlement must include Peltz. In addition, Trian outlined the outstanding issues they intend to address if elected to the board. http://www.sec.gov/Archives/edgar/data/30554/000093041315000396/c80174_dfan14a.htm Trian issued a shareholder presentation, a letter and a new website www.DuPontCanBeGreat.com supporting its nominees to the board. http://www.sec.gov/Archives/edgar/data/30554/000093041315000510/c80330_dfan14a.htm On February 17 Trian issued a shareholder presentation titled, "A Referendum on Performance and Accountability" http://www.sec.gov/Archives/edgar/data/30554/000093041315000692/c80358_ex-1.htm Dupont issued a letter saying Trian is basing its fight on myths https://finance.yahoo.com/news/dupont-issues-letter-shareholders-150700982.html Trian filed its proxy materials, posted introductory videos of its four nominees to its website (www.DuPontCanBeGreat.com), and issued a shareholder letter http://www.sec.gov/Archives/edgar/data/30554/000093041315001407/c80798_dfan14a.htm On April 8 Trian sent a letter to DuPont stockholders urging them to hold the board and management accountable for DuPont's consistent underperformance http://www.sec.gov/Archives/edgar/data/30554/000093041315001679/c80991_dfan14a.htm On April 21 Trian updated its talking points in a shareholder presentation http://www.sec.gov/Archives/edgar/data/30554/000093041315001868/c81085_ex1.htm
Proxy Solicitor to Trian Partners
% Outstanding 2.7% Cost Basis Not Avail Company Info Share Price 74.04 Revenue 34B Market Cap 67B Enterprise Value 72B Net Cash -6B EBITDA 6B 52 wk. range 63.70 – 80.65 EV/EBITDA 11.9
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Deutsche High Income Opportunities Fund (DHG) Activist Investor: Saba Capital
Investor Info Catalyst Info Shares 1,257,607 Catalyst:
On April 27 Saba Capital disclosed an 8.1% "active" ownership stake Comment: We initially covered DHG on July 10 when Bulldog disclosed a 5.65% "active" ownership stake (at the time DHG was trading at a -12.2% discount to NAV) On November 17, 2014 Bulldog increased its stake from 5.65% to 6.99% On February 2, 2015 Bulldog increased its ownership from 6.99% to 8.47% On March 16 Bulldog nominated four candidates to the board and submitted a proposal requesting the board authorize a self-tender offer at 100% of NAV. http://www.sec.gov/Archives/edgar/data/1375387/000150430415000025/EX-99.b.pdf March 25, 2015 Bulldog increased its ownership to 9.47%; April 13, 2015 Bulldog sent a letter to DHG commenting on the Company’s' claim that Bulldog's director nomination notice is deficient http://www.sec.gov/Archives/edgar/data/1375387/000150430415000039/EX-99.txt
Legal counsel to Saba Capital
% Outstanding 8.1% Cost Basis 13.68 Company Info Share Price 14.80 Revenue Not Avail Market Cap Not Avail Enterprise Value Not Avail Net Cash Not Avail EBITDA Not Avail 52 wk. range 13.31 – 14.98 EV/EBITDA Not Avail
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The Eastern Company (EML) Activist Investor: Barington Capital
Investor Info Catalyst Info Shares 325,703 Catalyst:
Barington issued a shareholder presentation outlining its "Case for Change". http://www.sec.gov/Archives/edgar/data/31107/000139843215000201/exh_1.htm Comment: We initially covered EML on March 17, 2014 when JAM Capital disclosed a 5.1% "active" stake in EML at an avg. cost of $13.07/share and announced it may present the company with opportunities to increase shareholder value. JAM sold all of its EML shares in April 2014. On September 29, 2014 Barington Capital disclosed a 5.23% "active" stake for $15.55 and announced it has met with EML's CEO and offered to help improve value organically and through acquisition. Barington also suggested two new board members. The board responded saying they have adequate in-house resources and do not intend to change the board at this time. On January 14, 2015 EML rejected a 6.69/share cash + $12.43/share offer from Synalloy On January 17 Minerva (6.0% at an avg. $14.15/sh) announced it is disappointed EML rejected a 6.69/share cash + $12.43 in shares bid from SYNL and believes it should hire an investment bank to examine a sale or substantial changes to its capital structure On February 5 Barington sent a letter to the Chairman/CEO saying they will share plans to: (i) improve Eastern's strategic focus, (ii) accelerate growth and product innovation in high-potential businesses, both organically and through targeted acquisitions, and (iii) improve Eastern’s corporate governance. Barington also announced plans to nominate two individuals to the board. On February 11 we reported that GAMCO had disclosed a 5.9% "active" stake for $16.98/share On February 20 Barington nominated two candidates for election to the board. On March 2 Barington filed its preliminary proxy materials to elect two directors. http://www.sec.gov/Archives/edgar/data/31107/000139843215000083/a12694.htm On March 9, Barington sent a letter to EML rejecting the board’s proposal to increase by two members and add one Barington representative. http://www.sec.gov/Archives/edgar/data/31107/000139843215000089/exh99_5.htm On March 27, Barington sent a letter to EML expressing its disappointment in the board’s decision to expand the size of the board after the annual meeting and appoint a new director, thus avoiding a shareholder vote for that individual. http://www.sec.gov/Archives/edgar/data/31107/000139843215000120/exh99_6.htm On April 13, Barington filed its definitive proxy statement and delivered a letter to the Company demanding the board repeal recent bylaw amendments, revoke the recent nomination of a board member, and several governance changes, including declassify the board, implement a majority vote standard, adding clawback provisions to compensations plans, disclosing a CEO succession plan, etc... http://finance.yahoo.com/news/barington-group-files-definitive-proxy-141500879.html
Proxy Solicitor to Barington Capital
% Outstanding 5.23% Cost Basis 15.55 Company Info Share Price 19.64 Revenue 141M Market Cap 124M Enterprise Value 112M Net Cash 11M EBITDA 15M 52 wk. range 15.05 – 20.67 EV/EBITDA 7.4
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Gran Tierra Energy (GTE) Activist Investor: West Face Capital
Investor Info Catalyst Info Shares 27,000,000 Catalyst:
On April 27 West Face Capital formally nominated 6 to the board. http://www.sec.gov/Archives/edgar/data/1273441/000156761915000592/s000879x1_dfan14a.htm Comment: We initially covered GTE on April 21 when West Face Capital disclosed a 9.78% stake in GTE and sent a letter to the Company announcing its intention to nominate six candidates. In the April 21 letter West Face discussed what it believes to be the significant value destruction from high-risk ventures outside of Colombia since 2011 and the Board’s role in that decline. On April 23 West Face issued a press release stating that incremental change and delay does not serve GTE shareholders, and called for sweeping change, a new board, a new CEO and a refocused strategy http://www.sec.gov/Archives/edgar/data/1273441/000156761915000582/s000861x3_dfan14a.htm
% Outstanding 9.78% Cost Basis 4.18 Company Info Share Price 3.77 Revenue 559M Market Cap 1.1B Enterprise Value 697M Net Cash 339M EBITDA 394M 52 wk. range 2.06 – 8.18 EV/EBITDA 1.8
Imation Corp (IMN) Activist Investor: Clinton Group
Investor Info Catalyst Info Shares 1,452,713 Catalyst:
Clinton mailed its proxy materials and issued a letter to shareholders seeking support for its nominees. http://www.sec.gov/Archives/edgar/data/1014111/000090266415002337/p15-1214exhibit_1.htm Comment: We initially covered IMN on December 15, 2014 when Clinton announced plans to nominate 3 candidates for election to the board Clinton filed its preliminary proxy materials to elect three directors to IMN’s board. http://www.sec.gov/Archives/edgar/data/1014111/000090266415001948/p15-0999prec14a.htm On April 10 IMN issued a letter to shareholders calling Clinton's plans for the business undefined and potentially self-serving Clinton issued a letter to shareholders clarifying the reasons for its proxy contest http://www.sec.gov/Archives/edgar/data/1014111/000090266415002146/p15-1112dfan14a.htm Clinton posted a website which included a presentation titled, "Enhancing Shareholder Value at Imation Corp" http://www.okapivote.com/imation/
Proxy Solicitor to Imation Corp
Legal counsel to Clinton Group
% Outstanding 3.4% Cost Basis Not Avail Company Info Share Price 4.16 Revenue 730M Market Cap 176M Enterprise Value 87M Net Cash 96M EBITDA -35M 52 wk. range 2.69 – 4.84 EV/EBITDA Negative
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Internap Corporation (INAP) Activist Investor: RDG Capital
Investor Info Catalyst Info Shares Not Avail Catalyst:
RDG Capital sent a letter to the board demanding they examine a sale, which it estimates could fetch $16-$19/share. https://sqps.onstreamsecure.com/origin/multivu_archive/ENR/RDG-Capital-Letter-to-Internap-Corporation-042415-2.pdf
% Outstanding Not Avail Cost Basis Not Avail Company Info Share Price 9.46 Revenue 335M Market Cap 505M Enterprise Value 896M Net Cash -339M EBITDA 59M 52 wk. range 6.27 – 10.75 EV/EBITDA 15.2
Deutsche High Income Trust Shares (KHI) Activist Investor: Saba Capital Management
Investor Info Catalyst Info Shares 1,491,434 Catalyst:
Saba changed its filing status from "passive" to "active" and increased its ownership from 8.23% to 9.4%
Legal counsel to Saba Capital
% Outstanding 9.4% Cost Basis 8.52 Company Info Share Price 9.11 Revenue 13M Market Cap 147M Enterprise Value 213M Net Cash -69M EBITDA N/A 52 wk. range 8.25 – 9.52 EV/EBITDA N/A
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LSB Industries (LXU) Activist Investor: Starboard Value
Investor Info Catalyst Info Shares 1,725,000 Catalyst:
LXU entered into a settlement with Starboard to expand the board to 13 and add 5 new directors. http://www.sec.gov/Archives/edgar/data/60714/000092189515001050/ex991to13da206297126_042615.htm Comment: We initially covered LXU on December 30, 2014 when Engine Capital (0.9%) sent a letter to the Board of LXU criticizing its governance and corporate structure, communications with shareholders and operational failures. On March 24 Starboard disclosed a 3.8% ownership in LXU On April 2 LXU announced a settlement agreement with Starboard to add 3 new directors. Engine Capital (0.9%) agreed to withdraw its nomination notice and support all of the Company’s director nominees. November 24, 2014 Starboard increased its ownership to 7.2% and said LXU has several viable alternatives to create substantial value for stockholders On March 10 Starboard nominated a slate of 5 directors.
Legal counsel to Starboard Value
% Outstanding 7.2% Cost Basis 33.75 Company Info Share Price 42.47 Revenue 733M Market Cap 989M Enterprise Value 1.3B Net Cash -268M EBITDA 62M 52 wk. range 28.91 – 47.33 EV/EBITDA 20.6
MGM Resorts International (MGM) Activist Investor: Land and Buildings (L&B)
Investor Info Catalyst Info Shares 3,787,000 Catalyst:
On April 27 L&B joined Pontiac General Employees Retirement System in calling for MGM to eliminate its Dead Hand Proxy Put provision in the company's debt agreement. http://www.sec.gov/Archives/edgar/data/789570/000090266415002319/p15-1203dfan14a.htm On April 29 MGM issued a shareholder presentation titled, "Improved Stewardship for Improved Returns" http://www.sec.gov/Archives/edgar/data/789570/000090266415002335/p15-1213dfan14a.pdf Paulson & Co (1.42% shareholder) announced its support for MGM's nominees saying the company should continue its strategy to build another resort in Macau and invest in non-gamin attractions in Nevada. Tracinda Capital announced its support for evaluating all avenues to deliver value at MGM, including a potential REIT conversion, as well as their commitment to the highest standard of compensation practice. Comment: We initially covered MGM on March 17 when Land and Buildings proposed MGM convert to a REIT to unlock value and nominated four to the board. http://www.sec.gov/Archives/edgar/data/789570/000090266415001802/p15-0944exhibit1.htm Land and Buildings issued a presentation indicating a 70% upside in stock value. http://www.sec.gov/Archives/edgar/data/789570/000090266415001802/p15-0944exhibit2.htm On March 30 Land and Buildings filed preliminary proxy materials nominating four people to the board http://www.sec.gov/Archives/edgar/data/789570/000090266415001984/p15-1012dfan14a.htm On April 1 Land & Buildings sent a letter to MGM calling on the board to form a committee and engage an independent financial advisor to evaluate options to create long term value. http://www.sec.gov/Archives/edgar/data/789570/000090266415002009/p15-1021dfan14a.htm On April 20 L&B sent a letter to shareholders highlighting the reasons to vote for its four board candidates. http://www.sec.gov/Archives/edgar/data/789570/000090266415002246/p15-1143exhibit_1.htm
% Outstanding 0.8% Cost Basis Not Avail Company Info Share Price 21.40 Revenue 9.7B Market Cap 10.4B Enterprise Value 22.7B Net Cash -12B EBITDA 2.1B 52 wk. range 17.25 – 27.64 EV/EBITDA 10.7
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Myers Industries, Inc. (MYE) Activist Investor: GAMCO Investors
Investor Info Catalyst Info Shares 6,607,410 Catalyst:
GAMCO announced that preliminary vote results indicate GAMCO's three nominees were elected to the board http://www.sec.gov/Archives/edgar/data/69488/000080724915000090/mye_54.pdf Comment: We initially covered MYE on July 6 2007 highlighting Gamco’s opposition to a previously announced merger agreement and Gamco’s unsuccessful attempts to elect four individuals to the company’s nine member board at the 2009 annual meeting, three individuals at the 2010 annual meeting, two individuals at the 2011 annual meeting and two individuals at the 2012 annual meeting. On February 15, 2012 Gamco sent a letter to MYE recommending two nominees for election to the board On March 13, 2012 we reported Gamco had filed preliminary proxy materials to elect two individuals to MYE’s board. Gamco’s nominees were defeated at the April 2012 Annual meeting. On February 21, 2013 GAMCO nominated one individual for election to MYE’s board. MYE entered into a settlement agreement with GAMCO to add GAMCO’s nominee to the board. On November 20, 2014 GAMCO announced it is presenting a proposal to MYE requesting that the Board of Directors take the necessary steps to ensure that the Company does not engage in a transaction, either through acquisition of assets, stock or otherwise, by which the Company would acquire an operating business, until the Company completes the sale of the Lawn & Garden Segment and returns 50% of its cash flow to shareholders. The cash flow should be returned to shareholders within two years following the completion of the sale. On January 28, 2015 GAMCO announced it will nominate three or more directors to the board of MYE On February 19 GAMCO nominated three candidates to the board. On March 30 GAMCO filed preliminary proxy materials to elect 3 directors. http://www.sec.gov/Archives/edgar/data/69488/000092189515000764/prec14a05687010_03272015.htm On April 2 GAMCO sent a letter to the Chair of MYE's compensation committee requesting additional information about the "claw back" comments in this year's proxy statement. http://www.sec.gov/Archives/edgar/data/69488/000080724915000061/mye_49.pdf On April 14, GAMCO issued a presentation depicting a "motion picture" of over a decade of inaction and poor oversight by MYE's board http://www.gproxyonline.com/ On April 17, GAMCO issued a press release announcing that ISS and Glass Lewis recommend shareholders vote on its proxy card at the annual meeting http://www.sec.gov/Archives/edgar/data/69488/000080724915000080/mye_53.pdf
Legal counsel to GAMCO
Proxy Solicitor to Myers Industries
% Outstanding 20.63% Cost Basis Not Avail Company Info Share Price 17.71 Revenue 624M Market Cap 566M Enterprise Value 749M Net Cash -232M EBITDA 60M 52 wk. range 13.94 – 24.74 EV/EBITDA 12.7
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Perry Ellis International, Inc. (PERY) Activist Investor: Legion Partners; CalSTRS
Investor Info Catalyst Info Shares 949,813 Catalyst:
CalSTRS/Legion submitted a shareholder proposal to declassify the board. http://www.sec.gov/Archives/edgar/data/900349/000092189515001092/ex991to13da209050004_042915.htm Comment: We initially covered PERY on July 16, 2014 when Legion Partners and CalSTRS formed an investment group, disclosed a 6% “active” stake, and highlighted several positive aspects of the business, including:
• A large portfolio totaling over 30 highly recognized owned and licensed brands, including: Axist, Ben Hogan, C&C California, Cubavera, Farah, Grand Slam, Jantzen, John Henry, Laundry by Shelli Segal, Original Penguin, Perry Ellis, Rafaella, and Savane, and the distribution of the Callaway Golf, Nike, Jag, Jack Nicklaus and PGA TOUR brands under licensing arrangements;
• Extensive distribution to approximately 20,000 retail doors; • Long-term relationships with key retailers; • Global sourcing infrastructure; • Licensing revenue streams from owned brands; and • Rapidly growing golf apparel business
Legion also demanded the board review strategic alternatives as well as (i) annual election of directors, (ii) a majority vote standard, (iii) a reduction in related party transactions, (iv) allow shareholders to act by written consent, (v) lower the threshold to call a special meeting, (vi) separate the Chair and CEO position, and (vii) change the supermajority vote requirement to a simple majority to amend the certificate of incorporation. On November 18 Legion and CalSTRS sent a letter to the board demanding they form an independent special committee to evaluate strategic alternatives http://finance.yahoo.com/news/calstrs-legion-partners-call-perry-210000133.html On November 20 PERY issued a letter to its shareholders highlighting a profitability improvement plan http://finance.yahoo.com/news/perry-ellis-international-issues-open-180000254.html PERY replaced a long-standing board member with a director having investment banking expertise in the retail sector http://finance.yahoo.com/news/perry-ellis-international-announces-appointment-211000250.html On February 10 PERY issued a letter to shareholders regarding governance changes and a reassessment of all related party transactions https://finance.yahoo.com/news/perry-ellis-international-issues-open-214848177.html
Legal counsel to Legion Partners
% Outstanding 6.0% Cost Basis 16.33 Company Info Share Price 23.76 Revenue 890M Market Cap 361M Enterprise Value 492M Net Cash -110M EBITDA 35M 52 wk. range 14.40 – 27.00 EV/EBITDA 14.1
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PICO Holdings Inc. (PICO)
Activist Investor: River Road Asset Management
Investor Info Catalyst Info Shares 2,031,750 Catalyst:
River Road Asset Management submitted a shareholder proposal to declassify the board Comment: We initially covered PICO on February 9 when Central Square disclosed a 5% "active" stake for $20.34 On February 24 River Road Asset Management sent a letter to the board suggesting they explore a sale of non-core assets and conduct a strategic review of its core business On March 31 River Road expressed support for the actions PICO took in response to its February 24 letter, explained why the stock is currently undervalued and suggested a share buyback. http://www.sec.gov/Archives/edgar/data/830122/000090901215000166/exh-a.txt
Legal counsel to Central Square
% Outstanding 8.8% Cost Basis 19.15 Company Info Share Price 18.00 Revenue 345M Market Cap 415M Enterprise Value 580M Net Cash -157M EBITDA -48M 52 wk. range 14.97 – 24.45 EV/EBITDA Negative
The Children’s Place, Inc. (PLCE) Activist Investor: Shareholders for Change at The Children's Place (Macellum Advisors and Barington Capital)
Investor Info Catalyst Info Shares 441,670 Catalyst:
Shareholder for Change issued a presentation in connection with its election of two new directors http://www.sec.gov/Archives/edgar/data/1041859/000092189515001063/ex991dfan14a00322chi_042715.pdf Comment: On April 10 Macellum/Barington nominated 3 to the board On April 24 Macellum/Barington filed preliminary proxy materials to elect 2 of 8 directors
Proxy Solicitor to The Children’s Place
% Outstanding 2.1% Cost Basis Not Avail Company Info Share Price 62.13 Revenue 1.8B Market Cap 1.3B Enterprise Value 1.1B Net Cash 225M EBITDA 141M 52 wk. range 44.54 – 65.00 EV/EBITDA 7.7
Pinnacle Entertainment (PNK)
Activist Investor: UNITE HERE
Investor Info Catalyst Info Shares Not Avail Catalyst:
UNITE HERE issued a shareholder presentation seeking support for several governance changes at the company. http://www.sec.gov/Archives/edgar/data/356213/000103442615000052/pnk042715filing.htm
% Outstanding Not Avail Cost Basis Not Avail Company Info Share Price 37.13 Revenue 2.2B Market Cap 2.3B Enterprise Value 6.0B Net Cash -3.8B EBITDA 560M 52 wk. range 19.66 EV/EBITDA 10.7
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Rovi Corporation (ROVI) Activist Investor: Engaged Capital
Investor Info Catalyst Info Shares ~530,000 Catalyst:
ISS recommends ROVI shareholder vote for two of Engaged's three nominees http://www.sec.gov/Archives/edgar/data/1424454/000092189515001082/dfan14a09455012_04282015.htm Glass Lewis recommends ROVI shareholders vote for two of Engaged’s nominees http://www.sec.gov/Archives/edgar/data/1424454/000092189515001111/dfan14a09455012_05012015.htm Comment: We initially covered ROVI on March 11 when Engaged Capital sent a letter to Rovi's board expressing frustration with the lack of progress on placing new directors and, as a result, announced four candidates for election. http://www.businesswire.com/news/home/20150312005207/en/Engaged-Capital-Sends-Letter-Board-Rovi-Corporation#.VQGFd-EWBTI Engaged filed its definitive proxy statement seeking to elect 3 new directors to ROVI's board and issued a presentation to support its campaign http://www.sec.gov/Archives/edgar/data/1424454/000092189515000960/dfan14a09455012b_04162015.htm On April 22 Engaged issued a supplemental presentation on ROVI. http://www.sec.gov/Archives/edgar/data/1424454/000092189515001006/ex1todfan14a09455012_042215.pdf
Legal counsel to Engaged Capital
% Outstanding 0.60% Cost Basis Not Avail Company Info Share Price 17.45 Revenue 542M Market Cap 1.6B Enterprise Value 2.5B Net Cash -800M EBITDA 186M 52 wk. range 17.03 – 26.44 EV/EBITDA 13.4
Select Comfort Corporation (SCSS) Activist Investor: Blue Clay Capital
Investor Info Catalyst Info Shares 1,053,435 Catalyst:
Blue Clay issued a letter to shareholders urging them to support change and elect its two nominees http://www.prnewswire.com/news-releases/blue-clay-issues-open-letter-to-shareholders-of-select-comfort-corporation-300075739.html?tc=eml_cleartime Comment: We initially covered SCSS on March 12 when Blue Clay filed prelim proxy materials to elect two directors. http://www.sec.gov/Archives/edgar/data/827187/000092189515000601/prec14a10184002_03112015.htm On April 1 Blue Clay filed its Definitive Proxy statement http://www.sec.gov/Archives/edgar/data/827187/000092189515000800/dfrn14a10184002_04012015.htm and issued a letter to shareholders outlining the reasons for electing its two nominees http://www.sec.gov/Archives/edgar/data/827187/000092189515000794/dfan14a10184002_04012015.htm On April 22 Blue Clay issued a shareholder presentation highlighting the need for change on the board http://www.sec.gov/Archives/edgar/data/827187/000092189515001007/ex1dfan14a10184002b_04222015.pdf
Legal counsel to Blue Clay Capital
% Outstanding 2.0% Cost Basis Not Avail Company Info Share Price 32.30 Revenue 1.2B Market Cap 1.7B Enterprise Value 1.6B Net Cash 122M EBITDA 161M 52 wk. range 18.00 – 35.75 EV/EBITDA 10.2
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TimkenSteel Corporation (TMST) Activist Investor: Elwood Group
Investor Info Catalyst Info Shares 4,285,026 Catalyst:
Ellwood increased its ownership in competitor TMST from 8.55% to 9.58% since March Comment: On January 7, 2015 Ellwood disclosed a 5.34% "active" stake in TMST
% Outstanding 9.58% Cost Basis Not Avail Company Info Share Price 31.22 Revenue 1.7B Market Cap 1.4B Enterprise Value 1.4B Net Cash -150M EBITDA 220M 52 wk. range 25.13 – 50.83 EV/EBITDA 6.2
Tempur Sealy International (TPX)
Activist Investor: H Partners
Investor Info Catalyst Info Shares 6,075,000 Catalyst:
H Partners sent a letter to shareholders reiterating the need for immediate leadership change. http://www.sec.gov/Archives/edgar/data/1206264/000092189515001098/dfan14a10304002_04292015.htm On May 1 H Partners issued a press release announcing all four proxy advisory firms support H Partners call for leadership changes. http://finance.yahoo.com/news/four-independent-proxy-advisory-firms-120000154.html Comment: We initially covered TPX on February 2, 2015 when H Partners disclosed a 9.97% "active" stake in TPX On February 16 H Partners sent a letter to the board demanding immediate leadership change. https://finance.yahoo.com/news/tempur-sealys-largest-shareholder-h-124200685.html On February 20 Chieftan Capital (5.78% shareholder) sent a letter to TPX supporting H Partners’ call for a CEO and board change. On March 24, 2015 H Partners filed preliminary proxy materials to solicit votes against three incumbent directors (TPX has a majority vote policy). http://www.sec.gov/Archives/edgar/data/1206264/000092189515000689/prec14a10304002_03202015.htm On March 30 H Partners submitted a demand to inspect the company's books and records to investigate possible corporate mismanagement and waste as well as breach of fiduciary duties by certain board members http://www.sec.gov/Archives/edgar/data/1206264/000092189515000759/ex991to13da410304002_032615.pdf On April 7 H Partners launched a website http://www.fixtempursealy.com/ to support its "Vote No" Campaign On April 13 Chieftan announced it has voted against the Company's director nominees. H Partners sent a letter to shareholders urging them to vote against the re-election of three incumbent directors at the May 8 annual meeting http://www.sec.gov/Archives/edgar/data/1206264/000092189515000976/dfan14a10304002_04172015.htm
Proxy Solicitor to H Partners
Legal counsel to H Partners
% Outstanding 9.97% Cost Basis 39.90 Company Info Share Price 57.69 Revenue 2.9B Market Cap 3.5B Enterprise Value 5.1B Net Cash -1.5B EBITDA 344M 52 wk. range 46.51 – 62.00 EV/EBITDA 14.3
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WESCO International Inc. (WCC) Activist Investor: Atlantic Investment Management (AIM)
Investor Info Catalyst Info Shares 2,219,655 Catalyst:
AIM disclosed a 5% "active" stake in WCC
% Outstanding 5.0% Cost Basis 69.77 Company Info Share Price 73.00 Revenue 7.9B Market Cap 3.2B Enterprise Value 4.5B Net Cash -1.3B EBITDA 524M 52 wk. range 65.38 – 93.07 EV/EBITDA 8.6
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HEDGE FUND SOLUTIONS CATALYST EQUITY RESEARCH REPORT ™
CONTACT INFORMATION: Hedge Fund Solutions, LLC Damien J. Park Tel. +1 215.325.0514 [email protected] FREE Subscription to the weekly report: http://www.hedgerelations.com/research.html or Email: [email protected]
The Catalyst Equity Research Report™ is a general circulation weekly. Hedge Fund Solutions and/or its affiliates (the “Firm”) may have a consulting relationship with the companies featured in this report (the “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 not guaranteed in any way.
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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: [email protected] Tel: +1 212.451.2333
Schulte Roth and Zabel LLP, one of the leading law firms in the activist investing area, has been involved in some of the highest-profile campaigns facing the business world in recent years. Serving both activist-only and occasional activists, the firm advises on federal securities law, state corporate law, Hart-Scott-Rodino, proxy rules and related matters, as well as handling investigations and litigations arising out of clients' activist activity. The firm, with over 375 lawyers in offices in New York, Washington, D.C., and London, has a long history of serving private equity and hedge fund clients. Contact: Marc Weingarten, Partner Email: [email protected] Tel: +1 212.756.2280 David Rosewater, Partner Email: [email protected] Tel: +1 212.756.2208
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PLATINUM SPONSORS – Proxy Advisors
Alliance Advisors LLC is a multi-faceted shareholder communications firm specializing in proxy solicitation, corporate governance consulting, and information agent services. Our in-depth view of the investor communities and governance environment allows us to prepare for successful outcomes. Alliance Advisors’ “fight team” has built a distinguished reputation by successfully completing countless contested assignments. The team will complete a comprehensive analysis of the shareholder base and build a calculated battle plan accordingly. We will assist in the crafting and delivery of your message to the target audience, ensuring the message is heard and understood. Alliance Advisors consistently delivers successful outcomes to our clients. Contact: Peter Casey, Executive Vice President Email: [email protected] Tel: +1 973.873.7710
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: [email protected] 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: Mark Harnett, President Email: [email protected] Tel: +1 212.929.5877
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