Spencer Capital Management LLC has announced that it intends to nominate an alternate slate of candidates for the board of Trident Microsystems Inc (NASDAQ:TRID). We’ve been following TRID since January 21 this year, arguing that it’s a good candidate for an activist campaign for the following reasons:
- It’s large for a net cash stock: As its $1.30 close yesterday, the company has a market capitalization of $83M. That puts it into the strike zone for funds with around $100M under management.
- It’s deeply undervalued: We estimate its liquidation value is around $167M or $2.66 per share, which is more than 100% higher than its close yesterday.
- Its value is predominantly cash: TRID is trading at half net cash value of approximately $155M or $2.48 per share.
- Its stock is liquid enough: According to TRID’s Google Finance page, the average volume for the stock is more than 530,000 shares per day. It traded more than 655,000 yesterday. With 63M shares on issue, an investor seeking ~5% of TRID needs a few more than 3M shares, which should be readily achievable in a reasonably short period of time.
- Management holds a vanishingly small number of shares and are net sellers.
Spencer Capital Management is a “New York-based fund advisor that specializes in deep value investing” headed by Kenneth H. Shubin Stein, MD, CFA. We’re not sure how much stock Spencer Capital Management holds. TRID doesn’t seem to feature in its most recent Form 13F and no 13D has been filed since December 31, 2008, the end of the period covered by the Form 13F. The investor’s press release reads as follows:
SPENCER CAPITAL MANAGEMENT, LLC SEEKS TO RESTRUCTURE THE BOARD OF DIRECTORS OF TRIDENT MICROSYSTEMS
Effort Aimed At Strengthening Corporate Governance And Repositioning Struggling Technology Company
Spencer Capital Management LLC, a New York-based investment partnership, announced today its intention to put forth a slate of candidates for election to the board of Trident Microsystems, Inc. (TRID). Trident Microsystems, based in Santa Clara, California, is a designer of integrated circuits for the digital television market.
Kenneth H. Shubin Stein, MD, CFA, and founder of Spencer Capital Management is leading the effort to restructure the board with an aim towards improving corporate governance and repositioning the company.
“This is a company whose revenue has deteriorated significantly, product line has lost ground and business model is under enormous pressure,” said Dr. Shubin Stein. “We intend to run a slate of candidates whose interests will be aligned with shareholders and who have the investing and technological expertise to effectively analyze the assets of the company and maximize their value. We encourage all shareholders to reach out to us to further discuss this proposal.”
Hat tip to JM.