Jim Cramer's TheStreet (TST) is Under Attack
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Following a precipitous fall from grace, TheStreet (NYSE: TST), a financial website founded by noted business personality Jim Cramer in 1996, is under attack from an activist investor. This development comes on the same day Daryl Otte stepped down as CEO.
FiveMore Fund Ltd, which describes itself as a strategic and long-term investor in TheStreet, sent a letter to the company's Board of Directors recommending an "urgent" strategic and financial review.
The fund said while the company's financial performance is stable, it is missing "a transparent plan to secure profitable growth and unlock the potential of its strong media presence." FiveMore said this is a must to attract institutional investors.
FiveMore also suggested selling, general and administrative expenses have remained "stubbornly high," pushing EBITDA into negative territory.
The fund said the company's assets are "capable of producing significantly more value from one / several strategic transactions." Highlighting specific assets, the fund notes the significant tax loss carry forward of $136 million and the cash position of approx. $77 million. This is compared to a market capitalization of just $57 million.
"We believe the company needs to return to strong growth not only organically but also through M&A and strategic alliances or it risks dissipation of its assets and further value erosion," according to the FiveMore letter.
FiveMore Fund said it is looking for a board seat, which it would use to help "reshape" the company's future.
It is unknown if Wednesday's shareholder activism is related to the decision by Mr. Otte to step down from the top spot.
Shares of TheStreet are down 2.35 percent to $1.66 in early-morning action.
FiveMore Fund Ltd, which describes itself as a strategic and long-term investor in TheStreet, sent a letter to the company's Board of Directors recommending an "urgent" strategic and financial review.
The fund said while the company's financial performance is stable, it is missing "a transparent plan to secure profitable growth and unlock the potential of its strong media presence." FiveMore said this is a must to attract institutional investors.
FiveMore also suggested selling, general and administrative expenses have remained "stubbornly high," pushing EBITDA into negative territory.
The fund said the company's assets are "capable of producing significantly more value from one / several strategic transactions." Highlighting specific assets, the fund notes the significant tax loss carry forward of $136 million and the cash position of approx. $77 million. This is compared to a market capitalization of just $57 million.
"We believe the company needs to return to strong growth not only organically but also through M&A and strategic alliances or it risks dissipation of its assets and further value erosion," according to the FiveMore letter.
FiveMore Fund said it is looking for a board seat, which it would use to help "reshape" the company's future.
It is unknown if Wednesday's shareholder activism is related to the decision by Mr. Otte to step down from the top spot.
Shares of TheStreet are down 2.35 percent to $1.66 in early-morning action.
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