Seeking Alpha

Mark Krieger's  Instablog

Mark Krieger
Send Message
Mark Krieger is an avid stock market trader dedicated to the following ideals: (1) Focus on high relative strength, (2) Buy low, sell high (3) Short high, cover low, (4) Go against the crowd, (5) It's all about the rules and discipline- hold them dear (6) Analyze the balance sheet-seek low... More
View Mark Krieger's Instablogs on:
  • Luby's: Shareholder Proposal For Reverse Stock Split Submitted

    I mailed (certified-return receipt requested) the following shareholder proposal to Luby's corporate offices on 7/21/14. I suggested a 1 for 2 reverse split, but a 1 for 3 might have been more appropriate, considering the enactment of the 1:2 reverse split, might not be enough to get the stock out of single digits, if it sinks any lower. one final note: If the shares rise (say above $7) then I reserve the right to withdraw this proposal, as its need would be certainly be diminished.

    the letter:

    Page 1 of 2

    7/18/2014

    Roy Amburg, Corporate Secretary Luby's Inc. 13111 Northwest Freeway, Suite 600 Houston, Texas 77040

    Dear Roy: Enclosed, please find my shareholder proposal for vote at next year's annual shareholder meeting. The proposal is being presented in accordance with SEC rule 14a-8

    In the past five years, the stock market has experienced one of its greatest bull market's ever, rising over 160%. Unfortunately, Luby's shares have not participated, and still trade near pre bull market levels achieved, back in March of 2009. There is no doubt, the current management team has been extremely stable (being at the helm for more than a dozen years) and has always put in a gallant effort towards improving operations , but that effort , has not translated into one iota of shareholder gain.

    It is time that management consider a "think outside the box" mentality, while embracing a sense of extreme urgency. The primary focus should be shareholder benefit. One way to accomplish this, is to examine alternative methods to enhance shareholder value, such as the reverse stock split (a form of financial engineering). Other methods include: (1) sale-leasebacks of untapped real estate locations and using the proceeds to repurchase shares or pay a special onetime dividend (2) Hiring an investment banker in an attempt to sell either a portion, or the company in its entirety.

    At this point in time, it would be a prudent step to adopt a "one for two", reverse stock split to help remedy the deteriorating condition of the stock price. Although some might argue this proposal as extreme, or even radical- it is clearly logical and sane. It is therefore my recommendation for shareholder's to seriously consider an affirmative vote for this measure, at the 2015 Annual Shareholder's Meeting.

    Passage of this proposal would reduce Luby's common shares outstanding by 50%, to 14,205,000 and simultaneously double its current share price (although market capitalization would initially remain the same). The implementation of a reverse stock split should improve shareholder value based on the following clear benefits:

    (1) Many stocks that fall below the $5.00 mark are no longer marginable by the brokerages that hold them in street name. This is because the broker begins to view the shares as too risky (inadequate collateral to loan on). This margin availability is vital to the marketability of a stock. It aids in creating buying power, and provides liquidity-helping prop up, a sagging share price.

    Page 2 of 2

    (2) It is a common for some mutual funds and institutions to be prohibited from holding stocks below the $5 threshold. Raising the share price, would open up these entities' ability to purchase the shares.

    (3) Shares in the single digits, often are lumped unfairly in an area associated with high risk and junk status and perpetuate the dubious connotations, of a penny stock. A rise above single digit status, would give the stock more respect and validity, while eliminating the negative stigma, typically associated with a low priced stocks. This should attract more buying interest.

    In conclusion, a reverse stock split is plainly in the best interests of Luby's shareholder's and should be deployed as soon as possible.

    Very truly yours

    Mark Krieger

    Disclosure: The author is long LUB.

    Jul 25 10:59 AM | Link | 7 Comments
  • Fuel Systems Solutions-Submission Of Shareholder Proposal To Repurchase Shares

    I submitted a shareholder proposal on 7/21/14 to FSYS's Corporate Secretary, Kevin Buckley via certified mail. The following letter is a copy of that proposal.

    We will see if it ends up going anywhere. I guess the chances of it passing are not that great, but just getting the topic out there for discussion, is a positive development. The bottom line? it doesn't hurt to try. Hopefully the company will respond to my letter and it doesn't fall into a black hole. I am cautiously optimistic, but I realize that the company is focusing on potential acquisitions that may require significant cash resources to fund.

    The letter:

    Dear Kevin: The following shareholder proposal is being submitted in accordance with SEC Rule 14a-8 for vote at the 2015 Annual Shareholder's Meeting:

    It is imperative that Fuel systems Solutions Inc. authorize a stock buyback program based on its ample net cash position, significant discount to book value and historically low share price (despite the stock market's robust performance the past five years). The buyback would accomplish the following:

    (1) Accretive to earnings-by reducing shares outstanding, earnings per share would rise. (2) Instill confidence in the marketplace, by emphasizing the company believes its stock is cheap.When a company purchases its own stock, it is essentially signaling to the market they think their stock is compellingly undervalued. This produces a positive psychological effect on the market. (3) the repurchasing process raises demand for its shares in the open market, resulting in a higher share price. (4) More effectively align The Board of Directors/Management's best interests to shareholder's.

    An authorization would give FSYS the flexibility to purchase shares only when the timing is right and by no means force them to make purchases. A 10% minimum commitment of available cash should be dedicated to such a repurchase program. The timing could not be better, as the shares are nearly 66% lower than when the company successfully sold 2 million shares at $30 per share in a secondary offering, just four years ago.

    In conclusion, a stock buyback authorization is in the best interests of shareholders. It would rapidly and markedly enhance shareholder value, without jeopardizing the capital needs for other corporate purposes. A primary focus and target of Fuel Systems Solutions should be returning capital to its shareholders. The stock buyback approach is the perfect mechanism to do so.

    Sincerely,

    Mark Krieger

    Disclosure: The author is long FSYS.

    Tags: FSYS
    Jul 25 10:36 AM | Link | Comment!
  • Fuel Systems Solutions Takes Off, Thanks To Kevin Douglas!

    In the last four trading days, (NASDAQ:FSYS) has literally taken off, jumping an astounding 24% with the absence of any news. What could of prompted the jump? Could of it been my recent SA story published last Sunday (wishful thinking on my part) or falling natural gas prices? I was simply stumped until Thursday afternoon (after market close) when the mystery was finally solved.

    A 13-d filing by Investor Kevin Douglas revealed that he had reached the threshold of becoming a greater than 5% owner of the shares. In fact, Mr. Douglas who previously controlled just under 5% of FSYS's outstanding shares ( he retained 1,056,671 shares ) nearly tripled his stake in the company by adding another 1,615,013 shares, and now owns 2,671,684 shares or 13.3% of the company. He now becomes FSYS largest shareholder, passing up CEO's Mariano Costamagna's 8.2% stake, consisting of 1,634,185 shares.

    Now that Douglas has acquired a much bigger ownership position, there is no doubt that he will be able to exercise more influence on the Board of Directors. He might be inclined to suggest a stock buyback , a special cash dividend or even recommend the sale of the entire company. Who knows what activist roles he could take? the sky is the limit. The point is he has plenty of skin in the game, and will want to make darn sure that investment ultimately produces a reasonable return.

    One thing I don't understand is why did the shares rally so much before the news was actually released? were there those "in the know" who were already buying pushing up the price?I would like to buy more shares, but would prefer to do so on a pullback (I absolutely loath chasing quick rising stocks). Hopefully for those who missed the boat entirely or simply want to juice up their current positions, the shares will encounter a correction and retrace about 1/2 of their recent gains, putting them back to the mid $12's, but don't count on it.

    I did not even bother to mention Mr. Douglas in my most recent article, because frankly I had sort of lost faith in his "Mojo" regarding FSYS...Boy, was I sure wrong...Mr. Douglas came to the rescue of long suffering FSYS shareholder's in a mighty big way. Thank you Mr. Douglas!

    Disclosure: I am long FSYS.

    Tags: FSYS
    Feb 13 9:29 PM | Link | 3 Comments
Full index of posts »
Latest Followers

StockTalks

  • $FSYS:not going to lie,this one was a big disappointment today.The good news is Becker Drapkin is likely still accumulating on any weakness
    about 3 hours ago
  • $NFLX: getting hammered in after hours now, but am unsure why. Anyone?
    1 day ago
  • $BIDU, $Z,$FB, $CRM, $NFLX, $TSLA, $LNKD, $CMG: finally getting some relief on my short positions-about flippin time
    1 day ago
More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.