Updated 01/16/13 20:13
Activist investors aren’t just a problem for Fortune 500 companies these days. Roughly six months after Cash America (CSH) shelved plans to IPO part of Enova, its online specialty finance subsidiary, the company has found itself under attack from little known activist SAF Capital Management. The firm, founded in 2006 by Mark McGowan, announced that it had recently acquired a ‘minority stake’ in the company and was pushing for the board to revisit the Enova divestiture and to up its share repurchases. The crux of their argument is that Cash America ‘is significantly undervalued and that the implementation of SAF`s proposals would unlock the currently hidden value of the Company`s e-commerce subsidiary, allow the market to more accurately appraise the worth of the Company`s retail operation and also increase the Company`s returns on invested capital.’ Of course. To support its case, the fund set up the very subtly titled http://www.shareholdervalueforcashamerica.com, however I was unable to access the site as my registration was denied. If you gain access, please let us know or post a comment below about its contents.
It sure seems like anyone can set up a website these days. SAF has not filed anything with the SEC nor did it disclose the size of its ‘minority stake’, which means it could own just a handful of shares. I couldn’t find any 13F filings for the fund, implying that it is a smaller shop. It didn’t appear to be active in too many other situations, although it was mentioned having influenced the liquidation of Soapstone Networks back in ’09. The only current ‘active’ situation appears to be with diagnostics company CombiMatrix Corporation (CBMX), where Mr. McGowan serves as Chairman of the Board. The company recently executed a 1 for 10 reverse split in order to remain listed on the Nasdaq.
This whole situation feels a bit off to me and is slightly reminiscent of another recent ‘activist’ situation. Cash America may very well end up pursuing a spinoff of Enova – heck, the company itself
planned to do so must be open to action having planned a partial IPO carve out just last year – but I am willing to bet that pressure from SAF will have little bearing on that decision.
Disclosure: Author holds no position in any stock mentioned.
- Investment fund calls for Cash America to increase repurchases (star-telegram.com)
- SAF Capital Management LLC calls on Cash America, Inc. Management to spin-off Enova Subsidiary. (sys-con.com)