Category Archives: Activist

Activism Simplest

Joseph Stilwell’s proxy campaign continues with Harvard Illinois Bancorp ($HARI), and May 22nd is the date set for the annual meeting.

As well-meaning as my previous commentary was, it now appears premature–for Mr. Stilwell’s latest letter to shareholders takes the written word down to three sentences, from seven.

Oh, but note, this time a picture is included.  And you know what a picture is worth…

April 7, 2014

Dear Fellow Shareholder,

Below is a picture taken at last year’s annual shareholder meeting of our Bank’s Chairman.  None of the other board members bothered to wake him up.

If you, like me, believe it’s time to bring a fresh influence to our Bank’s board of directors, please vote the GREEN proxy card for Mark Saladin.

Sincerely, Joseph Stilwell 

So for today, I will dub this–“activism simplest.”  Hopefully this moniker lasts longer than my last attempt.

Disclosure: No position.

Activism Made Simple

Activist investors deploy a wide range of public and non-public forms of persuasion to compel change in their targets.  Insofar as they take to the airwaves, their message–for better or worse–enters into that domain the ancients called “rhetoric.”  And were we to visit them awhile, they would tell us that there are at least three means of persuasion: via 1) the speaker’s credibility, 2) the emotions of the audience, or 3) the grip of the argument itself. (Stanford EoP)

Some activists, perhaps those most enamored with their rhetorical flair (or rather, more generously, those gifted to entertain), take the complex route, weaving an elegant and elaborate discourse of personal anecdotes and earnest appeals.  Yet, there is another way.

Stunningly simple, a written letter, seven sentences.

“Dear Fellow Shareholder,

HARI has publicly reported six full years of financial information. In each of the three years before its IPO, it reported a net loss. Since the IPO, our Company has produced subpar returns in each of the years for which financial results have been reported.[1] In every year for which information has been publicly reported except 2012, the CEO’s pay was greater than the earnings of the Bank.[2]

It is our belief that subpar returns are symptomatic of a poorly-run company with a board that does not hold its management team accountable. We believe it is now time to find a better-run community bank to buy HARI in an effort to maximize shareholder value. Our nominee, Mark Saladin, a partner of Zanck, Coen, Wright & Saladin, P.C., understands management responsibilities first-hand and will utilize his experience to push HARI’s Board in this direction.

Sincerely, Joseph Stilwell”   [Preliminary Proxy]

Simple, yes–but rather potent.

Disclosure: No position

Let’s Get Ready to Rumble

peerless_logoIt is our daily habit to take a stroll through the recently filed Schedule 13D’s and 13G’s.  On rare occasions we uncover a viable investment with an activist pushing to catalyze sedentary management.  On rarer occasions we find agitated investors angling for a fight.

In the recent 13D filing for Peerless Systems Corporation (PRLS), its Chairman Timothy Brog expresses some frustration with Highbury Financial’s (HBRF) current Board and management:


Peerless Systems Corporation owns 1,197,673 shares of Highbury Financial Inc. (“Highbury” or “HBRF”) common stock (“Common Stock”) and 1,525,241 warrants (“Warrants”) exercisable into a like number of shares of Common Stock.  As the holder of these securities, Peerless is one of the largest shareholders of Common Stock and together with our warrant ownership (assuming the exercise thereof), we are the largest shareholder of Highbury.

As you are aware a meeting took place in Chicago on July 1st (the “Chicago Meeting”) between the largest four non-management shareholders of Highbury (in the aggregate such shareholders own approximately 60% of the outstanding Common Stock) on the one hand, and management and the Board, on the other hand…  We have been patient to date, but we are disappointed that after almost three weeks since the Chicago Meeting you have continued to ignore your shareholders.  With no response, our patience has run out and our resolve is strong to take ALL available actions that a shareholder in HBRF possesses.

The audacity and self-serving behavior of corporate board of directors has always amazed us.  Almost every time we interact with a new board we hope for the best and prepare for the worst.  One of our favorite parts of dealing with boards is hearing them state that they always act in the best interest of their shareholders, they do not need the money from board fees and they have no desire to serve on a board if they no longer have the support of shareholders.  However almost invariably, shortly after making such statements, they take all possible measures to entrench themselves, waste corporate assets to achieve such purpose and hang on to their positions as board members for dear life.  Their attitude is “Damn the Shareholders, Full Speed Ahead.”

You gentlemen, the Board of Directors of Highbury, did not disappoint us.

Since Messrs. Cameron, Ammidon, Leary and Riordan refused to attend the Chicago Meeting they may not be aware of what transpired.   Several shareholders traveled thousands of miles to attend the Chicago Meeting, but other than Richard Foote no other Director attended even a portion of the 3½ hour meeting.  Since Bruce Cameron and his pals Messrs. Ammidon, Riordan and Leary did not have the “testicular fortitude” to participate in the Chicago Meeting in person, nor attempt to attend all or even a portion of it telephonically, nor even bother to explain their absence to shareholders, let us make it clear to each of you what you missed.  We stated in the conclusion of the meeting that management of Highbury should immediately resign and the Board should be reconstituted to include a representative of each of the five largest shareholders.  The other three large shareholders at the meeting, who, again, together with Peerless own in the aggregate approximately 60% of Highbury’s outstanding common stock (for those directors who want to disregard this fact, that is more than a MAJORITY), each individually reached the same conclusion and stated so…
I can assure you, it is not standard fare to find corporate executives musing publicly about the virtues (or vices) of another’s anatomy.  Thankfully, no women serve on Highbury’s board.  Of course, that could have made for an interesting retort.
Disclosure: None