Bombs are flying over the northern Israeli town of Rosh Pina, and they are not from Hezbollah military batteries in Lebanon. The bombs are between On Track Innovations (NASDAQ:OTIV) Chairman/CEO Oded Bashan and dissident shareholder Jerry Ivy. Both Bashan and Ivy have written letters to shareholders, outlining their positions concerning the upcoming proxy vote for three company nominated directors.
Bashan asks OTIV shareholders to continue to support his vision, management skills, and the company's business model for the future. This is a vision that has produced ZERO profitability in the company's 22 year history, burned over $50M in research and development in the past 6 years, and has seen the company's stock plummet over 90% from it's high in 2006 of $17.26. Furthermore, Bashan casts a shadow over the company's two dissident shareholders, blaming them for the company's dismal sales performance over the past year.
This is exactly what one does when things go bad. BLAME THE OTHER GUY. Is it Mr. Ivy's fault that the company failed to have an alternative supplier so when the monsoons hit Thailand in the fall of 2011, OTIV had a uninterrupted supply chain. Is it Mr. Ivy's fault that the company is not profitable? Is it Mr. Ivy's fault that the company lacks corporate governance? Is it Mr. Ivy's fault that OTIV's competitors are passing them by? And is it Mr. Ivy's fault that corporate financial guidance has never been achieved? Bashan believes the company's poor performance is the result of a "disruptive dissident shareholder". That's right Oded Bashan, BLAME THE OTHER GUY for your own lack of managerial skills.
According to Israeli law, Ivy has to wait until the company's board nominees are defeated before submitting his own board slate to a shareholder vote. Israeli financial reporter Shlomi Cohen recently called this shareholder battle a huge HEADACHE for Oded Bashan, and predicted that the shareholders will prevail over company management I concur with Cohen.
When the shareholders defeat management, I believe that shareholders will be rewarded by an IVY hand picked management team who have vast experience in increasing shareholder value. OTIV shares will no longer trade at a level just above book value or at a discount to their peers. Mr. Bashan, YOU HAVE NO ONE ELSE TO BLAME but YOURSELF for the problems that exist within your company.
Disclosure: I am long OTIV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.