A Takeover Proposal for Fremont: The Sweet Taste of Vindication

 |  Includes: BH, FMMH
by: Harry Long

Since June 17, 2008, I have written 11 articles on Fremont Michigan Insuracorp (OTC:FMMH) on Seeking Alpha, put up a website called BuildFremont.com, written to the board, met with management, and advocated specific changes in the company to improve shareholder value

My goals have been to:

  1. Strengthen corporate governance and transparency
  2. Improve underwriting
  3. Turn Fremont into a beacon for its hometown and the wider Midwest.

Yesterday, Steak N Shake (SNS) put out a press release with a proposal to buy Fremont for $24.50 per share (see here).

If I had to imagine, I would guess than any acquirer would see much of what I pointed out in multiple articles:

  1. Fremont has a clean balance sheet with a high quality investment portfolio, a headquarters property owned outright, and no debt.
  2. The company has strong reserving.
  3. Underwriting might be improved with an expansion to Indiana.

I have always thought the company would make a wonderful vehicle for a shrewd acquirer. In a July 1, 2008 Seeking Alpha article, I deemed it, "A Potential Takeover Target."

Unfortunately, Fremont never did adopt many of my suggestions, such as a sale-and-leaseback of its headquarters building, or an expansion to Indiana where the company might enjoy better pricing.

I have even advocated that Fremont Management "should hire an investment banker to solicit offers for the company and run a fair process which maximizes the purchase price of the company."

I suppose I should feel a sense of schadenfreude. Unfortunately, people often don't listen until it's too late. Many managements view people who propose innovative solutions to difficult business problems as thorns in their side at best, and enemies at worst.

In reality, when shareholders are viewed as owners, rather than some distant, faceless mass of people, it fosters a sense of collaboration, rather than distrust. Ideas are shared openly, companies prosper, they expand, hire more people, and communities, shareholders, employees, customers, and society itself, prospers.

At Fremont, as in America, either we all win, or we all ultimately lose.

Stay tuned, there are more Fremonts out there just waiting to be found.

Disclosure: Author holds a long position in FMMH