• A business that appears fundamentally undervalued in a sector ripe for consolidation.
• Debt holdings with default covenants triggered by a lack of financial compliance
• Executive departures
• Large cash expenses associated with audit compliance
• Questionable decisions and actions made by board members
• Board members that appear to lack independence. Four of the officers and directors are related through family connections.
• Shareholder lawsuits (not yet with MRVC, but I would expect them to be imminent if the company is de-listed)
Like Vitesse, MRV is an ideal activist target. The problem may be that the company is de-listed, and enters the same domain as Vitesse, where no annual meetings are held and therefore no directors can be replaced by proxy.
Disclosure: Author owns no position in MRV, and an immaterial short position in Vitesse Semiconductor.