When poor governance and shareholder idiocy happens and we do or say nothing, isn’t that lying down in front of a misattribution of Sir Edmund Burke?
This is a Southern Californian Aerospace And Defense company. We bought it post-March 2020 on what seemed obvious to us: the world won’t come to an end, aerospace will come back and a new CEO with “heritage” seemed to be making the right calls. Huge room for M+A growth from a small base. Improving ROIC from a bottom, big free cash flow as supply chain normalizes. Etc.
Well, we now have an open question – if you just can’t stand the management of a company and how it’s run, how is it ownable?
We will do 3000 words on this at some point this year. But suffice it to say, when you are a top 20 shareholder, continue to question why the cashflow is not in any way following reported earnings, and there remains VERY little information on which to judge allegedly great acquisitions and you just spent a friendly 90 minutes with the CFO, and THEN you get piped on a Friday night by Goldman down 17% from the last sale without a chance to participate, you tend to get pissed and start a giant reconsideration.
To wit: this is only part of the DUMB that gets articulated. Congrats – you were oversubscribed on an offering 17% below market, you are diluting current shareholders because you cannot generate any cash, and you want to increase share liquidity so more FinTwit numbnuts can day trade the stock. We are so proud.
Stephen G. Oswald Chairman, President & CEO
Yes, sure. So we did a follow-on offering, okay, in May, all right? So we sold 2.3 million shares, all right? And we had a — we were over 3.5x subscribed, right? So we were really excited about that. Now when I came in, I was like, what’s going on with the float. I mean, we were — I mean, it’s totally mismanaged, okay? I mean, I’m just — I’ll just tell you the way it is, but now we’re getting back on to it. Now we’re getting — I think this was a big step for the company. There was a little bit of an IPO in certain ways. We have a lot of new investors in the cap table, we’re excited about that. So I couldn’t ask for anything better.
Best practice here at Cove Street is private conversations between people who have skin in the game. There is an inflection point to every good idea. We have reached it in DCO.
