I sttill think the company is worth more than it is, but after some shareholder activism, and rejected buyout offer, proxy war, etc. It seems the current bonehead management is quite entrenched, so it might take real patience to unlock value. I am moving my money somewhere else, while looking closely at AVCA for any potential upside catalyst. By the way today's (May 21) downward movement in the absence of news was quite interesting, (down to close to 5% at the day's low). Maybe hangover from proxy result, or investors, like me are out of patience?
I still think the company is worth more than it is, but after some shareholder activism, and rejected buyout offer, proxy war, etc. It seems the current bonehead management is quite entrenched, so it might take real patience to unlock value. I am moving my money somewhere else, while looking closely at AVCA for any potential upside catalyst. By the way today's (May 21) downward movement in the absence of news was quite interesting, (down to close to 5% at the day's low). Maybe hangover from proxy result, or investors, like me are out of patience?
Advocat ( AVCA ) ( articles ) and Todd Robinson, who is waging a proxy contest for three seats on Advocat's board, each tried to garner public support today. The company suggested that Robinson's goal is to push through a related-party transaction:
Advocat Inc. (NASDAQ OTC: AVCA - News ) urges its shareholders to vote their shares of stock at the Company's annual meeting and not to allow Mr. Todd P. Robinson and Mr. Essel W. Bailey, Jr. to disrupt the meeting... The preliminary proxy notes that Mr. Robinson, Mr. Bailey and the third individual do no...
On March 13, 2007, Bristol Capital management made public a letter to the CEO as part of its 13 D/A filing stating its unhappiness with AVCA's management, and demanding some action (auctioning the company among other options) and board seats. Note Bristol owns roughly 4.5% of the company and has in the past offered to buyout the company at $16 something last year. Apparently management has been resisting any idea of selling the company.
Amit Chokshi of Kinnaras Capital Management has kindly permitted me to share with you his full research report on Advocat ( AVCA ) ( articles ). Thanks Amit!
Paul Kessler of Bristol Capital Advisors recently filed a 13D/A on Advocat, Inc. ( AVCA ) ( articles ) urging the company to "[e]stablish a special committee of directors which would immediately retain a well-known industry financial advisor to start an auction process and solicit offers for the Company and or engage in discussions with strategic buyers."
The sell-off that started on Friday is continuing today. The draw-down is, of course, disappointing to say the least, but the economics of the business are still intact. I expect that there's a fair case to be made for a short-term trade here. I wouldn't be surprised to see this reverse to the $16-17 range. While the volatility may feel like a bipolar off their meds, it's bound to happen on weak news, a weak market, and a 5mm float.
Given management guidance I expect $9-11mm in FCF in 2007. With a current market cap of about $70mm that is a 12.8 - 15.7% FCF yield and a (very) rough EV/...
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