- Lemelson Capital, previously short the stock, announces a new stake in company.
- Ongoing losses, operating failures, material misstatements warrant and require urgent executive management changes or a sale of the company.
- Underlying business has value, but not under current management.
Marlborough, MA, May 16, 2014 -- Lemelson Capital, LLC, a private investment management firm, today announced that they had taken a stake in shares of World Wrestling Entertainment (WWE) and called on the Board of Directors to replace the executive management team of the company following a period of consistent losses, execution issues and material misstatements.
Despite the stock's roughly 63% correction since Lemelson Capital's original short call less than two months ago (from $30.37 on March 17 to $11.33 as of publication of this release), the firm today also reiterated that fair value of WWE's common stock is between $8.25 and $11.88 with current management in place.
Lemelson Capital's original short thesis can be found here:
"WWE has affirmed that even with one million subscribers for its WWE network, the company stands to lose between $45 million and $52 million in FY 2014, which validates the original short thesis," said Emmanuel Lemelson, Chief Investment Officer of Lemelson Capital Management. "This follows what we believe to be material misrepresentations by the company about both the performance and operating profit model of its WWE network, which the company has wrongly labeled 'a homerun'," said Lemelson.
Lemelson Capital today also called on WWE's Board of Directors to promptly replace the company's executive management team, or explore the sale of the business, and said that such changes are a necessary component of any successful strategy going forward. "For example, promoting the WWE direct network's value to shareholders without a fair and accurate discussion of the implications to a traditional network revenue circumvented management's fiduciary responsibility as stewards of investor's capital, and is part of what has emerged as a pattern over recent years. Further, there are no pending operational developments in the pipeline to offset these significant losses," Lemelson added.
Lemelson Capital and its clients are long shares of WWE.
About Lemelson Capital Management
Lemelson Capital Management, LLC is a private investment management firm focused on deep value and special situation investments. For more information, see: http://www.lemelsoncapital.com
SPECIAL NOTE REGARDING THIS REPORT
THIS REPORT INCLUDES INFORMATION BASED ON DATA FOUND IN FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INDEPENDENT INDUSTRY PUBLICATIONS AND OTHER SOURCES. ALTHOUGH WE BELIEVE THAT THE DATA IS RELIABLE, WE HAVE NOT SOUGHT, NOR HAVE WE RECEIVED, PERMISSION FROM ANY THIRD-PARTY TO INCLUDE THEIR INFORMATION IN THIS PRESENTATION. MANY OF THE STATEMENTS IN THIS PRESENTATION REFLECT OUR SUBJECTIVE BELIEF.
THE INFORMATION CONTAINED ABOVE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF WORLD WRESTLING ENTERTAINMENT MAY TRADE AT ANY TIME. THE INFORMATION AND OPINIONS PROVIDED ABOVE SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION. INVESTORS SHOULD MAKE THEIR OWN DECISIONS REGARDING WORLD WRESTLING ENTERTAINMENT AND ITS PROSPECTS BASED ON SUCH INVESTORS' OWN REVIEW OF PUBLICALLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED ABOVE. NEITHER LEMELSON CAPITAL MANAGEMENT, LLC NOR ANY OF ITS AFFILIATES ACCEPTS ANY LIABILITY WHATSOEVER FOR ANY DIRECT OR CONSEQUENTIAL LOSS HOWSOEVER ARISING, DIRECTLY OR INDIRECTLY, FROM ANY USE OF THE INFORMATION CONTAINED ABOVE.
Certain statements contained in this letter are forward-looking statements including, but not limited to, statements that are predications of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Forward-looking statements are not guarantees of future performance or activities and are subject to many risks and uncertainties. Due to such risks and uncertainties, actual events or results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Forward-looking statements can be identified by the use of the future tense or other forward-looking words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "should," "may," "will," "objective," "projection," "forecast," "management believes," "continue," "strategy," "position" or the negative of those terms or other variations of them or by comparable terminology. Important factors that could cause actual results to differ materially from the expectations set forth in this letter include, among other things, the factors identified under the section entitled "Risk Factors" in World Wrestling Entertainment's Annual Report on Form 10-K for the year ended September 28, 2013. Such forward-looking statements should therefore be construed in light of such factors, and Lemelson Capital is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Disclosure: I am long WWE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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