2011 Mid-Year Shareholder Activism Update
2011 Mid-Year Shareholder Activism Update
2011 Mid-Year Shareholder Activism Update
activism to surge once again in 2011. With growing support from pension funds, a burgeoning M&A environment, excessive cash on companies balance sheets, and a slew of new corporate governance reforms coming out of Washington, most factors were certainly pointing in that direction. Thus far, the era of Dodd-Frank reform has yielded no such result. By contrast, according to data compiled from Hedge Fund Solutions weekly research on activist investing [Catalyst Equity Research Report], activism is actually down for the first 5 months of 2011 compared to that of 2010. Within the referenced period, the number of companies targeted by activists has fallen 15% to 142 so far this year. While it is clear that shareholder activism has fallen, there remains a lack of credible explanation for this. For one, it could very well be that the corporate governance reforms enacted and pending were over-hyped. It could also be that stock volatility and concerns about the economy have made investors wary about getting involved in multi-year investment campaigns. Whatever it may be, one should certainly not dismiss 2011 as an uneventful year for activism. Indeed when we look beyond the contested elections that culminated in a shareholder vote, we see that much more is happening behind the scenes than what is upfront and apparent. 2011 should be seen as the year that activism moved further away from the public limelight and inside the boardroom. Although 25 campaigns concluded with a shareholder vote so far (12 of these involved dissidents seeking board representation), 27 concluded with a settlement agreement between the activist and board of directors of the target company. In our opinion, this is a sign that both sides have become more adept at managing shareholder activism, knowing when best to concede, negotiate or fight.
Number
of
Targets
and
Activists
5
Months
Ending
June
1
180
160
140
120
100
80
60
40
20
0
166
142
137
93
Targets
Activists
70
60
50
40
30
20
10
0
2010
2011
Current
Settlements
Shareholder
Withdrawn
Campaigns
Vote
27
25
10
65
Targets
Bulldog Investors 9 Companies Targeted (Investment Focus: Closed-End Funds) Joseph Stilwell 8 Companies (Investment Focus: Thrifts/Banks)
3. 4.
Discovery Capital 7 Companies Targeted Financial Edge/PL Capital 6 Companies (Investment Focus: Thrifts/Banks)
5. 6.
Carl Icahn 5 Companies Targeted Starboard Value 4 Companies Targeted (Formerly Ramius Capital)
Shareholder
Vote
16
7. 8. 9.
Western Investment 4 Companies (Investment Focus: Closed-End Funds) Elliott Advisors 3 Companies Lawrence Seidman 3 Companies
Note: In general, this data reflects shareholder demands and binding shareholder proposals from investors owning at least 5% of a target companys stock. This data does not include non-binding shareholder proposals such as say-on-pay, majority voting, board de-classification and poison pills.
Ticker
AEPI AEPI AHCI ASBI
Market Cap
$184M $184M $109M $14M
Activist(s)
JMB Capital Partners KSA Capital Octavian Advisors LP Financial Edge Fund
Ownership Demand
10.00% 15.10% 6.00% 5.40% Explore a buyout Explore a buyout Explore unexploited growth opportunities
Meeting Date
Not scheduled Not scheduled June 14, 2011
Reduce overhead expenses, non-performing assets, and Not scheduled impact of credit losses; better manage capital structure Intended to nominate 2 individuals for election, to submit two proposals to terminate an advisory agreement and give shareholders an opportunity to realize NAV for their shares Implement majority vote standards for uncontested elections Declassify board to allow for the annual election of all directors Suggested expanding board from 6 to 9; elect Sheretz as director Elect 1 representative Columbia Pacific is exploring a transaction to acquire all remaining shares of BITS Increased ownership; improve corporate governance; explore various strategic alternatives Discussing value improvement with management
ASG
$131M
Bulldog Investors
11.91%
ATS Corporation ATS Corporation Barrett Business Services Inc. BCSB Bancorp Inc. Bitstream Inc. Barnes & Nobel BluePhoenix Solutions Ltd BlackRock Municipal 2018 Term Trust BlackRock New York Municipal Bond Trust Avis Budget Group Cryo-Cell International, Inc. Cryo-Cell International, Inc. Concurrent Computer Corp. Constellation Energy Partners LLC China Hydroelectric Corp Clorox Co.
ATSC ATSC BBSI BCSB BITS BKS BPHX BPK BQH CAR CCEL.OB CCEL.OB CCUR CEP CHC CLX
$91M $91M $145M $43M $59M $1.1B $29M $247M $41M $1.8B $35M $35M $55M $59M $230M $9.4B
LC Capital Osmium Special Situations Fund Kimberly Jacobsen Sherertz Financial Edge Fund Columbia Pacific Opportunity Fund Yucaipa Companies Prescott Group Capital Brooklyn Capital Management Bulldog Investors Senator Investment Group Ki Yong Choi David Portnoy Skellig Capital Management Investment Partners Asset Management NewQuest Asia Fund Carl Icahn
21.00% 21.08% 26.20% 9.80% 19.55% 19.80% 25.60% 1.87% 22.60% 7.24% 18.60% 14.40% 5.96% 1.30% 25.30% 9.80%
Not scheduled Not scheduled Not scheduled Not scheduled June 8, 2011 Not scheduled Not scheduled
Elect 1 Brooklyn Capital representative (Brooklyn is July 28, 2011 managed by Bulldog Investors) Redeem all outstanding auction rate preferred shares; July 28, 2011 elect 1 Bulldog representative Plan on engaging with management to explore strategic Not scheduled alternatives Elect 6 representatives Elect 5 representatives Implement a $7.5M Dutch Tender Offer Resume quarterly dividend distributions Intends to work with management to maximize shareholder value Supports a share repurchasing program Explore other alternatives to maximize shareholder value besides a sale to Golden Gate Capital (eg. a leveraged recapitalization, self tender-offer, management succession plan); improve corporate governance Not scheduled Not scheduled June 29, 2011 Not scheduled Not scheduled Not scheduled
CPKI
$452M
Clinton Group
5.10%
Not scheduled
Current Campaigns
Ticker
CRI CRWS CRYP DFZ DVD EKFC.OB ELMG ENWV EVOL FDO FF FFFD FPT FUN FXCB GCH HARI.OB HFBLD IQT ITEX.OB LAB LNBB LWSN
Market Cap
$1.7B $47M $24M $123M $73M $16M $398M $20M $75M $6.4B $545M $23M $90M $1.1B $191M $385M $7M $39M $177M $14M $163M $45M $1.8B $143M
Activist(s)
Berkshire Fund Wynnefeld Partners Amaya Gaming Group Mill Road Capital Marathon Capital Joseph Stilwell MMI Investors Steel Partners Karen Singer Trian Fund Osmium Special Situations Fund PL Capital Bulldog Investors Q Funding Lawrence Seidman City of London Investments Group Joseph Stilwell Joseph Stilwell Bulldog Investors Polonitza Group Summit Capital Management Umberto Fedeli Carl Icahn Western Investment
Ownership Demand
13.20% 17.00% 7.44% 5.80% 12.70% 9.50% 7.70% 6.60% 22.90% 7.89% 15.68% 8.30% 31.26% 18.10% 7.00% 29.90% 9.10% 7.90% 17.56% 14.30% 6.80% 7.11% 10.80% 5.00% Intends to communicate with management; explore strategic activities; assess balance sheet Elect 1 Wynnefield representative May consider a strategic transaction with CRYP Examine a tender offer to go private; increased ownership Explore a sale Prevent the dilution of tangible book value; hopes to work with management Elect 4 MMI representatives; explore a sale Examine proposed merger of ENWV with GigOptix, Inc. to prevent or limit the resulting devaluation of ENWV's NOLs Sell Numbering Solutions business to NeuStar, Inc. Seeking to acquire the company for $55 to $60/share Plans to work with management to maximize shareholder value Explore a sale; communicate operating strategy Plan to nominate and vote for one representatives as Trustee Delay annual meeting to allow for shareholder nominations; increase dividend distributions Discussing with management; may seek board representation Close stock's discount to NAV Increase return on equity; explore a sale Work with management to maximize shareholder value; increase dividends; repurchase shares Elect 1 representative; redeem all outstanding auction rate preferred shares Improve profitability; increase franchise locations; improve corporate governance and profitability
Meeting Date
Not scheduled August 9, 2011 Not scheduled Not scheduled Not scheduled Not scheduled June 30, 2011 Special meeting on June 17, 2011 June 23, 2011 Not scheduled Not scheduled Not scheduled Not scheduled July 7, 2011 Not scheduled June 10, 2011 Not scheduled Not scheduled Not scheduled Not scheduled
Reject company's merger proposal with Cowen Group Special meeting on June 15, 2011 Reduce board size; change board roles; larger ownership by management Supports $11.50/share sale to Golden Gate Capital Not scheduled Special meeting on June 29, 2011
Current Campaigns
Ticker
NDN NECB NTSC NTSC OPWV OVRL PBCP.OB
Market Cap
$1.4B $88M $63M $63M $199M $48M $18M
Activist(s)
FBR Capital Markets Corp. Joseph Stilwell Sandler Capital Management Lin Jack Starboard Value Clinton Group PL Capital
Ownership Demand
5.44% 8.40% 8.09% 22.00% 6.10% 16.80% 18.80% Raise $19.09/share going-private transaction to the $21.75 - $23.50/share range Examine board compensation; reconsider geographic expansion; increase dividends; improve corporate governance Increased ownership; explore a sale Intends to nominate 3 individuals to the board to explore a sale Increased ownership Discussing with management Examine a "second-step" transaction Reject executive bonus plan; Withhold vote for Mitchell Soloman; explore strategic alternatives; reduce compensation; improve board independence Maintain dialogue with management regarding operations, strategy, capital structure, and corporate governance Increased ownership; explore sale of entire company Reconstitute compensation committee; change board structure and roles; remove poison pill; examine potential bids Support BBVA proposal to liquidate the fund; close discount to NAV Plans to work with management to increase shareholder value Intends to work with management to maximize shareholder value Explore a sale Commenced a tender offer to puchase up to 1M shares of common stock; elect 4 representatives Remove poison pill; allow for shareholder special meetings; improve corporate governance Encourage management and the board to pay dividends and repurchase shares Outright sale of entire company, as opposed to the sale of only several practices
Meeting Date
Not scheduled Not scheduled Not scheduled Not scheduled Not scheduled June 14, 2011 Not scheduled
P&F Industries
PFIN
$16M
Lawndale Capital
9.95%
Not scheduled
RadNet, Inc. Red Lion Hotels Corp Scott's Liquid Gold The Ibero-American Fund SP Bancorp Inc. Sunshine Financial Tier Technologies Inc. TS&W Claymore Tax-Advantaged Balanced Fund Vermillion, Inc. Wolverine Bancorp LECG Corporation
RDNT RLH SLGD.OB SNF SPBC SSNF.OB TIER TYW VRML WBKC XPRT.PK
$169M $146M $5M $65M $21M $14M $85M $178M $76M $37M $2M
Red Mountain Capital Columbia Pacific Opportunity Fund Timothy Stabosz City of London Investments Joseph Stilwell Joseph Stilwell Discovery Group Western Investment Manchester Management Co. Joseph Stilwell T2 Partners
5.80% 23.57% 5.00% 18.90% 9.40% 9.70% 14.80% 7.10% 9.20% 9.20% 5.24%
June 16, 2011 Not scheduled Not scheduled Not scheduled Not scheduled Not scheduled Not scheduled Not scheduled June 6, 2011 Not scheduled Not required to file with the SEC
Current Campaigns
COBK
$48M
Lawrence Seidman
6.90%
DIRI.OB DLIA
$15M $52M
24.88% 9.15%
Elect a majority of new directors; get company to host annual meeting by May April 28, 2011 31 Shareholder representation on board Reject Blackstone's $5/share bid; Icahn offers to purchase DYN for $5.50/share Reject Blackstone's $5/share bid; reject Icahn's $5.50/share bid; consent solicitation to remove 2 directors and elect 2 Seneca representatives; improve operations, strategy, and governance Declassify board; elect 3 Western representatives Elect 2 Dialectic representatives March 25, 2011
Dynegy Inc.
DYN
$671M
Icahn Capital
14.92%
March 8, 2011
Dynegy Inc.
DYN
$671M
Seneca Capital
9.30%
March 8, 2011
HQL IMMR
$275M $234M
5.10% 8.20%
IRM
$6.6B
Elliott Associates
4.97%
Elect 4 Elliott representatives; change tax structure by converting company into a April 18, 2011 REIT; potentially limit growth capex Work with management to increase shareholder value January 24, 2011
JCP
$7.8B
28.40%
JOE
$2.6B
28.92%
Replace entire board with Fairholme and February 25, 2011 shareholder representatives Elect 3 Elliott representatives; explore strategic alternatives; refocus investments in America Board representation; intends to call a special meeting; inspect NAVR's stockholder list Elect 3 Platinum representatives to the board
National Express
LON: NEX
$1.3B
Elliott Advisors
17.50%
NAVR NEOP
$75M $401M
10.30% 9.99%
Settlement Agreements
NLCI
$122M
53%
RRGB RSYS
$555M $198M
13.50% 18.63%
Corproate governance and operational improvements; elect 2 Oak Street April 5, 2011 representatives Implement share buybacks and quarterly March 16, 2011 dividends
SCD
$395M
Western Investment
8.30%
SurModics Inc.
SRDX
$201M
Ramius Group
12%
Improve investments, acquisitions, and reduce spending; elect 3 Ramius representatives to the board
January 5, 2011
Ryan Levenson Discovery Group Kenisco Capital Management Kensico Capital Management
Elect 3 representatives to the board $40 million Dutch Tender Offer; elect 4 Discovery representatives to the board Elect 1 or more Kenisco representatives Elect 1 or more Kenisco representatives
May 5, 2011 February 19, 2011 February 16, 2011 February 16, 2011
Visteon Corp.
VC
$3.1B
6%
VII
$19M
Henry Partners
5.30%
Deploy excess capital; initiate quarterly dividends Initiate quarterly dividends, stock buybacks; articulate strategic and financial plan
VII
$19M
Anita Zucker
11.32%
Settlement Agreements
AACC
$112M
16.10%
Withold votes for re-electing a board member; improve company's May 12, 2011 strategy, leadership, and execution Elect 1 Barington representative Reject sale to AFCV Holding's at $10.50/share March 30, 2011 Special meeting on April 14, 2011
Management nominees elected Activist won its contested board seat; Chairman & CEO re-elected Activist defeated; company merger approved Activist defeated; management slate elected Activist defeated In uncontested election, poison pill was amended and implemented against Nicusa Capital's wishings Shareholders approved the reorganization of BLU into an openend fund Activist defeated; merged with Footstar for $27.25/share in cash CEO re-elected as director; amended bylaws to provide for annual elections 2 FrontFour nominees elected; 2 management nominees elected; board size reduced from 10 to 9 2 FrontFour representatives supported by GAMCO elected; 2 management nominees elected; board size reduced from 10 to 9 Activist defeated; company merger approved Activist won 3 seats on a 11-member board Activist won 3 seats on a 11-member board Activist defeated Activist defeated
1.30% 6% 5% 12.19%
Elect 6 Elliott representatives to the May 5, 2011 board; reduce R&D; explore a sale Change board composition; elect 3 May 6, 2011 nominees Address compensation and poison pill issues; improve transparency; May 11, 2011 Withhold votes for management nominees Increased ownership; replace current investment advisor; enter into an advisory agreement with Brooklyn Capital Management Reject sale to Footstar Corp Withhold vote campaign; replace CEO as director Elect 4 FrontFour representatives; pursue a sale if elected Elect 3 indendepent FrontFour nominees; improve disclosure Reject $43.50/share buyout from TPG and Green Partners Elect 3 Icahn representatives; sell the company; made an all-cash tender offer for $1.86B Elect 3 Icahn representatives Elect 1 Bulldog representative Chairman to resign Special meeting on February 8, 2011 Special meeting on March 24, 2011 April 27, 2011
BioClinica, Inc.
$80M
5.50%
BLU
$108M
Bulldog Investors
18.22%
CPEX CTO
5.71% 26.9%
Fisher Communications
FSCI
$243M
FrontFour Capital
2%
Fisher Communications
FSCI
$243M
GAMCO Investors
28.49%
J Crew Group, Inc. Mentor Graphics Mentor Graphics Macquarie/First Trust Infrastructure/Utilities Div&Inc Fund Magyar Bancorp, Inc.
$2.8B Mason Capital (Taken Private) $1.5B $1.5B $143M $29M Carl Icahn Casablanca Capital Bulldog Investors Financial Edge Fund
March 1, 2011 May 12, 2011 May 12, 2011 April 18, 2011 March 16, 2011
Shareholder Vote
Elect 2 GAMCO representatives to April 29, 2011 board Reject $13.25/share buyout from Surgery Center Holdings Elect 1 Director Elect 2 Bel Fuse representatives; sell Company to Bel Fuse Remove the poison pill and pledge not to adopt another one without shareholder support; explore strategic alternatives Terminate investment advisory agreement between the Fund and Daiwa SB Investments Opposed Rock-Tenn buyout offer equal to 50% cash ($17.50/share) and 50% stock (0.0365/RKT shares) Oppose $7.05 Management-led buyout Elect 6 Ramius representatives Special meeting on May 4, 2011 May 23, 2011 May 18, 2011
$105M HealthInvest Partners (Taken Private) $22M $192M S. Muoio & Co Bel Fuse Inc.
RRGB
$555M
9.73%
Singapore Fund
SGF
$139M
24.85%
June 2, 2011
SSCC
Third Point; Monarch Alternative $3.6B (Taken Private) Capital; Royal Capital $107M
$393M
8.97%
Special meeting on June 2, 2011 Special meeting on February 24, 2011 Special Meeting on March 11, 2011
UPFC.PK ZRAN
NA 9.30%
Shareholder Vote
Advanced Analogic Technologies, AATI Inc. Celera Corp. Charles River Laboratories International Immersion Corp. CRA
CRL
6.01%
Support merger with Skyworks Solutions; elect 2 May 26, 2011 individuals to 7-member board Reconstruct proposed merger to carve out nonstrategic drug royalties or raise purchasing price May 17, 2011 per share Form a Strategic Planning and Capital Allocation Committee; explore strategic alternatives, January 25, 2011 including a sale Elect 3 Ramius representatives Sought to acquire company for $9.25/share in cash; Sell to HIG Capital at least at $8.75/share March 11, 2011 May 4, 2011 February 18, 2011
IMMR
McCormick & Schmick's Seafood MSSR Restaurants Inc. Matrixx Initiatives Matrixx Initiatives Tessco Technologies Inc. Tenet Healthcare Corporation Vantage Drilling Company MTXX MTXX TESS THC VTG
$8/share sale to HIG Capital undervalues MTXX February 18, 2011 A majority vote standard in uncontested elections April 25, 2011 Elect new board (14 nominees); offer to acquire THC for $6.00, increased to $7.25 Elect 2 Jasper representatives to the 9-member board May 9, 2011 January 7, 2011
Withdrawn Campaigns