Financial Mail - Investors Monthly - - Cover Story -

THOUGH IT might be tough for an ac­tivist share­holder ini­tia­tive to find enough op­por­tu­ni­ties to carve a vi­able in­vest­ment niche, IM would of­fer the fol­low­ing as can­di­dates for a shake-up:

TREN­COR*: The com­pany’s main as­set is a ma­jor stake in Cal­i­for­nia-based and New York Stock Ex­change-listed con­tainer man­age­ment group Tex­tainer. So is there re­ally a need for Tren­cor to carry the cost of a full board of di­rec­tors … or in­deed ex­ist as a hold­ing com­pany if there is a way to un­bun­dle the Tex­tainer shares?

HOW­DEN: The share price of this spe­cialised industrial ser­vices counter has drifted af­ter a de­ci­sion to hold back div­i­dend pay­ments in lieu of clinch­ing an em­pow­er­ment deal. This all sounds per­fectly rea­son­able ex­cept for the fact that How­den is awash with cash and that sub­stan­tial cash is still flow­ing to its US-based par­ent via fees. It’s heart­en­ing to see a bou­tique as­set man­age­ment com­pany — led by the re­spected An­thony Sedg­wick — openly con­fronting How­den. That ef­fort will ul­ti­mately gar­ner div­i­dend flows and bol­ster mar­ket rat­ings of the com­pany. Sedg­wick does, though, mull omi­nously whether de­vel­op­ments are not “part of a strat­egy to un­der­mine the clear at­trac­tion of the busi­ness, drive the share price as low as pos­si­ble and then make an of­fer to battle-weary mi­nor­ity share­hold­ers, which they would be happy to ac­cept”.

DAWN: This di­ver­si­fied build­ing sup­plies spe­cial­ist has al­ready riled share­hold­ers for of­fer­ing to buy back the shares owned by its em­pow­er­ment part­ners at a huge pre­mium to the mar­ket price. With the spe­cific share buy-back pro­pos­als seem­ingly off the ta­ble, ac­tivist share­hold­ers could now push for a buy-back of Dawn shares at cur­rent prices. Per­haps there’s also scope to urge di­rec­tors to hone the “scat­tered” op­er­a­tional fo­cus by sell­ing off non­core or more mar­ginal as­sets?

AC­CEN­TU­ATE: This floor­ing spe­cial­ist has not only been a se­rial un­der­per­former, but has also seen its ac­qui­si­tion strat­egy go awry. That’s why a con­sor­tium of dis­sent­ing share­hold­ers has shown its dis­sat­is­fac­tion by block­ing the pass­ing of cer­tain spe­cial res­o­lu­tions in the past five years. The share trades well be­low in­trin­sic net as­set value (NAV) and mi­nor­ity share­hold­ers — in spite of legal set­backs — are not likely to let ex­ec­u­tives for­get how much value can be un­locked by a slicker op­er­a­tional per­for­mance.

REX TRUE­FORM: This small fash­ion re­tailer is con­trolled by the Shub fam­ily by virtue of an ar­chaic pyra­mid hold­ing com­pany struc­ture and lowvot­ing N-shares. A dis­con­nect op­er­a­tionally be­tween Rex­tru and its larger listed ri­vals has in­creased pres­sure on the fam­ily to en­hance re­turns. There might be a chance to un­lock a chunk of NAV by sell­ing off valu­able prop­er­ties, or dress up the fash­ion of­fer­ing by tak­ing cor­po­rate ac­tion to add new re­tail el­e­ments.

AR­GENT: On pa­per, this industrial con­glom­er­ate of­fers huge up­side po­ten­tial against its last stated tan­gi­ble NAV. The hitch is that op­er­a­tionally things are sput­ter­ing along, and man­age­ment ap­pears to dif­fer vastly from as­set man­agers on the best way to un­lock this enor­mous value.


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