Ron Bienvenu, Co-founder and Co-CEO of the Louisiana-based buyout group Spear Point, is well-poised to identify and invest in undervalued public companies that would benefit from a strategic shift in power.
In 2002, in response to the Enron fiasco– which eventually led the company to go bankrupt– the Sarbanes-Oxley Act (SOX) was passed, setting new or enhanced standards for public company board members in the United States. Bienvenu recognizes the passage as a reason why the power began shifting from the board to the CEO in many organizations.
In many Wall Street companies, there is no pressure on the board, which allows many of the companies to be run like a piggy bank, or as Bienvenu stands by, like a country club.
Spear Point has become widely known for its potential rework of the financial news site TheStreet.com. Bienvenu and partners are demanding that Co-founder and Chairman Jim Cramer earn his keep and take actions to remove potential conflicts at the board level.
Last week, Bienvenu spoke about the past, present and future of corporate activism in America. Following his informative and uniquely positioned talk on the subject, Bienvenu is eagerly awaiting a move from TheStreet. Spear Point sent another letter to the company just this morning (December 17).
Spear Point owns over 2% of TheStreet’s common stock and strongly believes that the company would significantly increase in value if it were to address its capital structure deficiencies. Beyond this, Spear Point hopes to acquire a number of companies and relocate some or all operations to lower cost areas such as New Orleans.
When a Netflix executive posted an update on his Facebook page in July 2012 about the company, which had surpassed 1 billion viewing hours in a month, he had supposedly disclosed material nonpublic information in a nonpublic manner. Netflix and its CEO Reed Hastings were then investigated by the Securities and Exchange Commission (SEC).
The Regulation Full Disclosure (Reg FD) rule reads, in part: “Whenever an issuer, or any person acting on its behalf, discloses any material nonpublic information regarding that issuer or its securities to [certain enumerated persons], the issuer shall make public disclosure of that information… simultaneously, in the case of an intentional disclosure; and…promptly, in the case of a non-intentional disclosure.”
In April 2013, the SEC confirmed that it would not pursue an enforcement action against Netflix or Hastings, and also provided additional guidance regarding Reg FD and the use of social media. The SEC clarified that a social media networking site may be used under Reg FD to communicate material nonpublic information provided appropriate steps are first taken, including alerting the market about the type of information that may be disclosed on such sites. Applying this guidance, public companies, and possibly investors themselves, are able to use social media sites to disclose material information to the marketplace. Additionally, the SEC’s 2007 e-proxy rules already provided for the delivery of proxy solicitation materials over the internet, allowing both companies and investors to reach shareholders electronically, eliminating the costs of sending hard copies to shareholders.
Bienvenu said this opened the Pandora’s Box of communication possibilities between shareholders. “Bottom line is that the new regulations dramatically lower the cost of running an activist campaign by over 90%,” because investors and executives are permitted to reach shareholders electronically, eliminating many costs.
“This is cutting edge stuff,” Bienvenu continued. “Not just cutting edge for locals, it’s cutting edge for Wall Street.”
According to Activist Insight’s 2012 Shareholder Activism Review, last year proved to be another year of positive development for activism. The organization predicted the continued growth and notable success stories would have two effects in 2013: more money will flow into the activist funds and more managers will adopt an activist strategy.
“There’s a new golden age of activism upon us,” said Bienvenu in an exclusive interview with Silicon Bayou News. “Activism is becoming more prevalent and effective. We intend for Spear Point to be the leader of that.”
The Spear Point partners have experience in corporate activism. According to Bienvenu, activists by definition are outsiders. By operating in New Orleans, the team can maintain an outsider’s perspective and look at companies objectively.