Athens: One of Stealthgas’ major shareholders has told the chairman of the board that the LPG carrier owner must enhance shareholder value.
Daniel H Abramowitz, president and sole owner of Hillson Financial Management, wrote to Stealthgas chairman Michael G. Jolliffee on February 9, voicing his concerns about the “long-term poor performance” of the stock.
“It is clear, and your refusal to even acknowledge it is quite troubling,” writes Abramowitz, who has owned shares in Stealthgas since 2005.
Stealthgas’ share price has fallen more than 53% from a year-high of $11.70 on April 4, 2014, to $5.46 at the close of business yesterday.
Abramowitz says that a self-tender offer should be made, a quarterly dividend reinstated, and corporate governance should be improved to restore value for shareholders.
Prior capital allocation decisions have done the most damage to the stock, Abramowitz says, “but it is also the area where there is the greatest opportunity for improvement”.
“Since the end of 2012, you have repeatedly diluted existing shareholders through a series of follow-on offerings,” he writes. “This led to a reduction in book value per share of 17% and an even sharper decline in EPS [earnings per share]. This is not a recipe for growing shareholder value, and it goes a long way towards explaining our stock’s poor performance and steeply discounted valuation.”
Abramowitz says that Stealthgas has also failed to address questions raised previously over various related party transactions that he says are serious conflicts of interest.
“We also reiterate our objection to the Rights Plan in general and the 10% trigger in particular. You have repeatedly touted the Vafias family’s 12.5% stake, yet you have now prohibited anyone else from accumulating a similar-sized position. This raises yet another barrier, particularly for large institutional investors that might have an interest in the stock,” the investor writes.
Stealthgas has yet to make any comment on the letter.