Seeking Alpha
View as an RSS Feed

Activism Analysis  

View Activism Analysis' Comments BY TICKER:
Latest  |  Highest rated
  • Zeltiq Aesthetics And Solta Medical Are Likely In Play [View article]
    Congrats, you were right and I was wrong. I said we'd have to wait 'til March, but we did indeed get a deal before the year was over.
    Dec 16, 2013. 09:34 AM | Likes Like |Link to Comment
  • Activist At RCM Technologies Is A Positive Influence [View article]
    Another update: The meeting was on Dec. 5. Monday, after market close, RCM announced that the two dissident nominees were elected. The vote was pretty overwhelming: the dissident nominees received 7.9 million and 6.2 million votes each; the management nominees received 3.7 million and 2.7 million.

    What's next? I don't know. The Legion group noted quite a few objectives in its proxy filings, including reviewing strategic alternatives. Note that they only have two of six boards seats, though, so they can't just do what they like. I'd guess that another special dividend is coming, to optimize capital structure, but I really don't know.

    I'll continue to keep an eye on the company, but it's certainly a bit more expensive than it was a few months ago. In the 2.5 months since article publication, the stock is up 16% (6.88/5.95=1.16). Not a bad return!
    Dec 11, 2013. 12:16 PM | Likes Like |Link to Comment
  • Digital Generation: On The Right Track [View article]
    OK, that's the math I got too. $27m in 2014 post-overhead EBITDA, multiply by 11x to get $10.60/share in standalone value.

    Am I wrong that you're missing the $40m in TV working capital that online biz gets to keep? So that would mean the company wouldn't actually have to provide additional working capital to the online biz, adding $40m to your cash calculations, or $1.42/share. That brings us to $5.50/share in cash instead of $4.14. Add in the $20m in cash it's keeping on the sidelines (actually I believe the company said it would be $10-$20m), or $0.70/share, and that's $6.20/share in cash on top of the $10.60 standalone value, or $16.80 total.

    (I actually had slightly higher number earlier because I failed to account for transaction expenses originally; thanks for that.)

    Extra value if company uses excess cash after dividend to buy back shares and reduce share count at favorable multiple.
    Nov 18, 2013. 04:24 PM | Likes Like |Link to Comment
  • Digital Generation: On The Right Track [View article]
    Great article. I feel the same way, though I don't currently own shares. Just to be clear, is your $16-$18 estimate before or after the $3 dividend?
    Nov 18, 2013. 03:15 PM | Likes Like |Link to Comment
  • PLX Technology May Be Sold By Year's End To Avoid Proxy Fight [View article]
    For those following, a lot has happened since I published this article. On the ownership front, Discovery Group filed a 13D (5.2%), Raging Capital filed a 13G (6.2%), and Potomac increased its stake to 10.3%. The proxy fight heated up with PLX's preliminary proxy, filed Oct. 25. Read the background of the solicitation section in the definitive proxies for more details, but it seems Potomac is pretty committed to a sale.

    Earnings were a slight dud, with EPS at 6 cents vs. expected 7 cents. The stock opened down 10% or so the next day, but constant buying drove the price back up and above within a couple of weeks.

    The stock's now at 6.40, up from the 5.50 when I wrote this article (up 16%). I still like it here, in part because of this development, which got no attention:

    In a press release a few days ago, PLX quietly said it was reviewing a sale. "Contrary to statements by Potomac Capital, your Board and management team have been and remain committed to exploring ways to maximize value for all PLX Technology stockholders, including through a sale of the Company."

    This statement was not made in any previous press releases or SEC filings, so I consider this to be very important. With Potomac urging a sale and PLX saying its reviewing one (although I don't know how seriously), I think it's more likely than not that the company sells itself in the next four weeks (leading up to the Dec. 18 annual meeting). Given the recent price appreciation to $6.40, an appropriate premium would place a sale above $8.

    As for who might acquire PLX, I don't know the industry well enough to speak intelligently on the matter. However, I think it's worth noting that Potomac (along with Balch Hill) had a hand in getting STEC (solid state drives) sold to Western Digital. I'm sure Potomac has at least reached out to Western Digital in regards to PLX, and there's certainly a possibility that Western Digital is interested in using PLX's connectivity solutions to improve its drive offerings.
    Nov 18, 2013. 12:29 PM | Likes Like |Link to Comment
  • Icahn Versus Frost [View article]
    Icahn would not use Cadus as an acquisition vehicle; it has $22 million in cash. He doesn't spend his time on companies this small, and he doesn't use Cadus as an investment vehicle either. Liquidation is possible, but that would only be of small value (cash/liquidation value is $1.70/share, current price is $1.67). Given that this company makes zero revenue and that I believe Icahn has no interest in doing anything with this company (other than liquidating, which isn't a sure thing), I can't imagine any reason to hold this stock at this level.
    Nov 14, 2013. 12:37 PM | Likes Like |Link to Comment
  • Activist At RCM Technologies Is A Positive Influence [View article]
    I'll update this: Given certain language used in the recent crossfire between the two sides, I no longer think a sale before the meeting is worth counting on. I'm encouraged by the company's financial results, low valuation, and buyback plan, but a sale doesn't appear to be in the cards. I do still own the stock though.
    Nov 12, 2013. 02:57 PM | Likes Like |Link to Comment
  • Is An Acquisition Of Solta Medical Imminent? [View article]
    I would maintain what I've said from the beginning: that a sale will happen in March or April. These things take time and the board doesn't need to hurry.
    Nov 11, 2013. 06:41 PM | Likes Like |Link to Comment
  • Is An Acquisition Of Solta Medical Imminent? [View article]
    Nice job. Per today's PR:
    "Solta's Board of Directors announced that it engaged Piper Jaffray to act as its financial advisor in the evaluation of strategic alternatives. Piper Jaffray will assist the Board in considering a range of options, which may include strategic partnerships, investors, alliances or a possible sale or merger of the company. The Company does not plan to disclose or comment on developments regarding any strategic alternatives until further disclosure is deemed appropriate."
    Nov 11, 2013. 04:07 PM | Likes Like |Link to Comment
  • Hedge Fund Clinton Group Takes Aim At ValueVision Media [View article]
    Glad to see this idea as a new account.
    Nov 4, 2013. 09:01 AM | Likes Like |Link to Comment
  • Activist At RCM Technologies Is A Positive Influence [View article]
    I don't believe the annual meeting date significantly changes the probability of a sale here. I agree it makes a sale *slightly* less probable (because there's less time), but it's definitely not off the table, and I think that slight negative is counterbalanced by the meeting date functioning as a sale deadline. I wrote in the article "most likely the meeting will be scheduled for early December," so this was definitely expected. (For those who don't know, the company announced in an October 1 8-K that it would hold its annual meeting on December 5.)

    We should expect to see preliminary proxy statements from each side in the next week or two. We'll learn more from IRS/Legion about what they're looking for there. In the 8-K, the company set a new nomination/proposal deadline (Oct. 15), so it's possible that IRS/Legion files a 13D/A in the coming days (or hours) to disclose that it resubmitted its nomination notice. However, I'm unsure on this, as the 8-K language is unclear as to whether the IRS/Legion nominations from January are still valid.

    A date for earnings has not yet been announced, as far as I can tell, but it should be in early November, as last quarter's earnings were released on August 8. If earnings are very strong, that will take the pressure off for a sale, but if earnings are weak, the company may be strongly pressured to sell itself. Either way, that's a win for investors, and I expect the stock will cross $7 by the end of the year.
    Oct 16, 2013. 01:37 PM | Likes Like |Link to Comment
  • Is An Acquisition Of Solta Medical Imminent? [View article]
    1. As I mentioned in my comment on your last article, Voce cannot call a special meeting. The company's bylaws prohibit this action. Voce has to wait for the next annual meeting. I agree with you that they will nominate directors then, though.

    2. If the company has not yet even hired an investment bank, how could a sale be imminent? A sale process would take months. I stand by my belief that the company will not be sold until springtime.

    3. The business judgment rule, in practice, means the board can do essentially whatever it wants without repercussion. It's not a shareholder tool—it's a director defense.
    Sep 25, 2013. 09:28 AM | Likes Like |Link to Comment
  • Bob Evans Farms: The Value Is In The Pieces [View article]
    Nice job Shaun. This is exactly what Sandell asked for today.
    Sep 24, 2013. 03:23 PM | Likes Like |Link to Comment
  • How Qualcomm Might Be A Beneficiary Of Tesla's Supercharger Network [View article]
    Matt Harvey approves this message.
    Sep 24, 2013. 01:46 PM | Likes Like |Link to Comment
  • Herbalife: Will Icahn Cash Out Sooner Than Not? [View article]
    Icahn cares a lot about his reputation; it's critical to the success of his other investments. While it could conceivably make sense for him to take his profits if this were a one-time investment, he's a repeat player in activism, and his reputation is his strongest asset. I expect he'll hold on to all of his stock for at least a year. See Netflix for the closest comparison of a stock doubling and Icahn holding on.
    Sep 19, 2013. 04:08 PM | 12 Likes Like |Link to Comment