Insomnia Log

This is what keeps me awake at night???

Who needs sleep? (well you’re never gonna get it)
Who needs sleep? (tell me what’s that for)
Who needs sleep? (be happy with what you’re getting,
There’s a guy who’s been awake since the second world war)

-- words and music by Steven Page & Ed Robertson

Location: Boulder, Colorado, United States

Everything you need to know about me can be found in my posts

Friday, March 17, 2006

RIP Intrado

On April 4, there will be a special meeting of the shareholders of Intrado, a local Boulder County company that provides emergency 911 services. The purpose of the meeting is to allow the shareholders to vote on the proposed sale of the company to West Corp. This will be a sad day for small business.

I'm not an employee or customer of Intrado. But I am a (small) shareholder. We bought a few shares seven years ago, at $3.625 per share. When the sale is approved, these shares will be worth $26 each. A nice return of over 600% in just 7 years. So, why am I upset (other than not having bought more shares)?

Intrado is a great example of a successful, local, small business. They are in a growing market, and they have been doing well year after year. Just the kind of company you want to do business with, or invest in.

Then, a little less than a year ago, Roy Disney (yes, that Disney) and his investment company, the Shamrock Activist Value Fund, purchased a bit over 6% of Intrado. And immediately, Disney strove to prove the "activist" in the name of his fund. Specifically, "shareholder activist".

Now, it used to be when I thought of someone as a shareholder activist I would picture a long-haired guy at the GM annual meeting who bought one share so he could demand that the gerbils that run around the wheels in the engines inside all those cars get union benefits. But Disney and his buddy, Stanley Gold, proved me wrong. A shareholder activist is someone who buys just enough shares to get the company management to listen (which I guess is 6.2%) and then demands changes to drive up the stock price.

That's exactly what happened. Disney and Gold immediately started bullying management, demanding an audience, professing to speak for all shareholders, and pushed for the company to take actions to drive up the share price (by buying back shares, among other demands).

When I invest in a company, I don't do it because I want to make a quick buck. I'm looking for a company that is well managed, has a good market, and is poised to do well in the long run. I guess that makes me a follower of Warren Buffet. But the shareholder bullies, I mean activists, don't necessarily agree with this approach.

So, they got their wish. In January, Intrado announced their forthcoming sale to West. Shamrock's investment will be more than doubled. And, barring a major shareholder revolt, I assume the sale will happen as scheduled. But be assured that I won't be voting for it. Why should I? If I truly believe in the company, this means that I can no longer participate in its continued growth.

Roy Disney, this is not investing. This is gambling, but with loaded dice.



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