The Challenge:
A niche small-cap company had recently undergone a management transition and restructuring plan. The shareholder base included a combination of legacy investors (including one 13D filer) and 10 new activist-oriented holders (including two 13G filers). These new investors were led by one primary activist who had courted others to the stock.
Alpha’s Solution:
- Alpha initiated several conversations with new activist followers and learned that most had very limited knowledge of the company or its investment thesis.
- The company was not interested in being consolidated and believed there was a significant opportunity to generate shareholder value if given time.
- Alpha worked with the new executive leadership team to better articulate both the strategic goals of the restructuring, as well as the milestones that Wall Street could use to measure their implementation success.
- Through this process, several strategic messaging shifts were identified by Alpha that helped supply better qualitative direction and guidance, while keeping investors focused on the long-term path.
- Our team also participated in several board discussions around the use of a poison pill, a staggered board, and other defense mechanisms, should they be needed.
Results:
- As a result of Alpha’s communication strategy, the primary activist exited the stock within two quarters.
- Additionally, most of the naïve activist followers exited soon thereafter.
- The team’s focus then turned to rebuilding the shareholder base with higher quality shareholders.
- Our team has been instrumental in securing ownership by long-term value-oriented investors like Royce, Tocqueville and Kennedy.
