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Category : Stock Ideas

The Fire is Burning – OM Group Continued

Related: Plus ça Change, Plus C’est La Même Chose. ************************ The following is a letter by Wynnefield Capital Management to fellow shareholders of OM Group (OMG), released June 11, 2015: ************************ Wynnefield Capital Management, LLC 450 7th Avenue, Suite 509 New York, NY 10123 OMG’s Board Orchestrates a Decade of Disaster   Dear fellow shareholders, Wynnefield Capital is an investment management firm focused on an equity small-cap value special situations strategy that practices constructive activism. The firm was founded by […]

Plus ça Change, Plus C’est La Même Chose.

(Translation: Another Weasel-like Deal Where Public Shareholders are Sold-Out.) The topic for today is the deal announcement on May 31st that the OM Group (NYSE: OMG) decided to sell itself to the private equity firm Apollo Group for $34 a share. We own approximately 1.5% of the shares outstanding at an average cost of roughly $28 purchased within the last year, so the transaction beats a sharp stick in the eye…but not by much. Here is what we find offensive: […]

Further Thoughts on the Merits of Buybacks

by Rohan Rangaraj | Research Analyst One of the official Favorite Books in the Cove Street Capital Library is The Outsiders by William Thorndike, an in-depth study of eight of the last half-century’s greatest CEOs in terms of value creation. One trait they all shared was the propensity to go against conventional wisdom and buy back their company’s own stock when it was cheap. The key here is cheap. We’ve noted on this blog before that many Boards and management […]

50 Shades of Grey, the G-rated Version

From time to time I have embarrassing moments, like admitting I have read L.J. Rittenhouse’s book, “Investing Between the Lines: How to Make Smarter Decisions by Decoding CEO Communications.” This was a fairly simplistic read on a 2 hour flight that essentially says: a CEO should write like Carol Loomis (or Warren Buffett)—be clear, be honest, and admit when you have made a mistake. This press release could be its polar opposite. When viewed in the context of a CEO […]

The Reluctant Warriors

A friend of ours who works for a well-known activist firm summed it up perfectly when he said, “We are living in the era of the activist halo.” From 300-page PowerPoint presentations to incredible revelations about the amount of salt that should be included in pasta water to investors who own 20,000 shares asking for Board seats, there has been a proliferation of “activist” activity. Some of this is good, some of this is bad as Wall Street is just […]

What a Phony, Part II

Click here for Part I: The Worst Piece of Corporate BS, 2/11/2013 A recent article in the Wall Street Journal penned by Michael Dell is so full of self-serving garbage it is difficult to know where to start. (Click here to go to the op-ed at WSJ.) What is clear in most companies is that the fish rots from the head and Dell’s decade of miscues—led by Michael Dell and his hand-chosen successors— brought it to a position of miserable valuation, investor […]

Leading Candidate for Worst Sell Side Piece in 2014

In regard to Tesla… Having defended our more cautious stance for over a year, we find ourselves torn in upgrading as it is clear substantial risks remain. This is, in part, given (1) the lack of available data to question management’s claims with respect to battery pack durability (among other long-term warranty / residual / service / charging infrastructure related issues), and/or (2) despite lofty expectations, Tesla has never generated even one-sixth of the profitability per share based on the […]

More Corporate Governance Weirdness

The “Entertainment Business” is well known for having a callous disregard for other people’s money. The origins of Live Nation (LYV) and some of the Board principals involved—current and former—include some of the more egregious examples we’ve seen in our career. Liberty Media, represented on the Board by Greg Maffei and Mark Carleton, has clearly been an adult influence on what was truly a cacophonic beginning for LYV. While Greg Maffei gets some very mixed reactions in some circles, we […]

If Invited, I Shall Serve — A Rock and Roll Update

by Jeff Bronchick | Chief Investment Officer Fender tried to go public in 2012. It failed and here is why. In how the world should work, the prevailing private equity investors bit the bullet and raised new capital at levels well below what was being offered to the public. “New” CEO Larry Thomas retired. Private equity buyer TPG Growth is the new sheriff in town. “New” models are being introduced and most interestingly, Fender is tentatively experimenting with the Direct-to-Consumer […]

Tessera: Our Vote is In

Our premise is simple: we bought Tessera because the stock was cheap and we received nearly free optionality on either the development of a new technology or improvement in the managing of the core business.  In a very short period of time, the management team members proved themselves to be some combination of incompetent, careless or clueless. We have been BLESSED with the entrance of what appears to be a competent group of investors—Starboard Value—who have experience in real activism and […]