In 13D filing filing after the close on Ryerson Inc. (NYSE: RYI), Owl Creek disclosed a 5.3% stake (1.39 million shares) in the company and said they are not confident in the current management's ability to improve operating results. The firm also said they believe Harbinger's slate of seven independent directors would add more specific industry experience and be more proactive managers.
From the 'Purpose of the Transaction' section of the filing:
The Reporting Persons have reviewed the amended Schedule 13D filing by Harbinger Capital Partners on January 2, 2007 and the Issuer's disappointing fourth quarter 2006 results, and have spoken to the senior management team about their short-term and long-term plans for the Issuer, as well as management's thoughts regarding Harbinger's proposals. The Reporting Persons are not confident in current management's ability to improve the operating results of the Issuer given the Issuer's history of underperformance. While the Reporting Persons do appreciate the general business and financial experience that the current Board of Directors possesses, the Reporting Persons believe Harbinger's slate of seven independent directors would add more specific industry experience and be more proactive managers of the Issuer.
Under the shepherding of the current management team and Board of Directors, the Issuer has underperformed its peer group in key operating metrics such as inventory turns, margins, return-on-invested-capital, and share price returns. The Reporting Persons are concerned that the current management team and Board of Directors are not sufficiently proactive in managing the Issuer in an industry with a constantly changing business and operating environment. The Reporting Persons find it peculiar that the current management team specified a number of new initiatives only after Harbinger filed its Schedule 13D. The Reporting Persons do not see evidence of a credible plan to support management's goals of improving underperforming service centers, achieving an inventory turn rate of 5x by the end of 2007, and operating more efficiently. Moreover, if there are actionable ways for the Issuer to achieve these goals, it begs to question why these actions have only been implemented in response to shareholder pressure and have not been implemented sooner since the management team has been in place since 1999.