Since most hedge funds get paid based on their returns for the year, managers who want to get the most out of a stock investment often turn to shareholder activism as a way to increase shareholder value and ultimately boost their returns.
Here at Stockpickr.com, we track the latest activist situations for those interested in possibly piggybacking these activist funds.
Private investor John Edgemond, who owns 7.3% of Alliance Bankshares (ABVA), is calling for the company to explore strategic options, including the possible merger, sale or consolidation of Alliance with another bank holding firm, or the sale of all or substantially all of the firm’s assets, all for the purpose of enhancing long-term shareholder value.
Shares of Alliance Bankshares have been particularly hard-hit, falling from $20 to just $1 in less than two years, as the current credit and economic crisis adversely affected the company’s business model. Even still, Alliance is trading below its cash in the bank, with $127 million in cash and $107.7 million in debt, equating to $19.3 million in cash, which is more than double the company’s current market cap of $8.3 million. Further, Alliance has a stated book value per share of $7.7. A book value is the theoretical value of a particularly asset on the firm's balance sheet.
Noted activist investors Shamrock Activist Value Fund recently sent a letter to the board of Collectors Universe (CLCT) urging the company to remove the firm's “poison pill."
Interestingly enough, Collectors Universe is a bit of recession-proof stock, providing authentication and grading services to high-value assets to increase their value and liquidity, enhance general interest and trading and provide asset protection. Collectors Universe’s revenue is broken down as follows: $4.1 million from coins, $2.5 million from sports cards, $2.2 million from gemstones, $2 million from diamonds, $2 million from stamps, $1.2 million from autographs and $1.1 million in paper assets.
Collectors Universe has $23 million in cash ($2.52 per share in cash) and zero debt.
DellaCamera Capital announced that it is urging the board of CuraGen (CRGN) to explore additional methods of delivering value to shareholders, which include putting the firm up for sale. Currently, CuraGen has a market cap of $40 million, with $91.4 million in cash ($1.58 per share) and $18.97 million in debty, equating to a negative enterprise value of -$33 million dollars.
CuraGen has two drugs in phase II testing, for metastatic melanoma and breast cancer. The company also has five other drugs in its pipeline, with a quarterly cash burn of $3 million to $4 million
Perceptive Advisors and Tang Capital, both of which control about 37.8% of PenWest Pharmaceuticals (PPCO), announced their intention to act as a joint group for the purpose of electing three members to PenWest’s board.
Back in early November, Perceptive Advisors published a detailed report suggesting that the worst-case scenario for shares of PenWest is $1.59, while the best case is north of $15 per share.
Posted on Jan. 21, 2009
