Activist Investor Takes Stake in Fremont Michigan Insuracorp

Includes: BH, FMMH, JACK
by: Harry Long

Steak N Shake (SNS), run by activist investor Sardar Biglari, who took over Steak N Shake, Western Sizzlin, has just filed a 13D in Fremont Michigan Insuracorp, showing 9.9% ownership.

Sardar has a successful history of activist investing, not only in the companies he now controls, but also in his fight with Friendly's Ice Cream.

The wording of this part of the 13D was interesting (bold font my own):


Item 4. Purpose of Transaction.
The Reporting Person acquired the Shares for investment purposes. The Reporting Person intends to evaluate its investment in the Shares on a continual basis and may, from time to time, communicate with the Issuer’s management, members of the Issuer’s board of directors, and other stockholders of the Issuer concerning, inter alia, ownership structure as well as strategic, operational, and governance issues.
The Reporting Person may, from time to time, acquire additional Shares, dispose of the Shares or formulate and communicate to the board of directors of the Issuer other plans or proposals regarding the Issuer or the Shares, to the extent deemed advisable in light of its general investment policies, market conditions or other factors.

I have some advice for Fremont's management. They should hire an investment banker to solicit offers for the company and run a fair process which maximizes the purchase price of the company. Management and Directors own over 13% of the company, so they have an incentive to do so. That way, they might also choose their suitor. I would find it very unlikely that any investor would want to keep them on (but that's just my opinion).

By hiring an investment banker, the company can have some control over the process and solicit a fair price, rather than being in the reactionary position of responding to possibly low offers, which while low in relation to book value, may exceed the company's 52 week high share price.

Disclosure: Harry Long owns FMMH shares directly, through partnerships, and through trusts. To the best of his knowledge, certain of his family members own FMMH shares through partnerships and trusts. Such ownership may change at any time.