Analysis Activist investor-controlled Imation is setting up an investment advisor subsidiary and putting $20m into an offshore investment fund controlled by the activist investor controlling Imation.
In an 8-K SEC filing, Imation stated its management "approved a plan to establish a registered investment adviser as a wholly-owned subsidiary of the Company." It will develop "revenue generating product offerings and advisory services to outside institutional investors consistent with its own investment initiatives."
Let's remind ourselves that this is the Imation that's selling off non-core asets, has a crashing share price and is facing de-listing from the New York Stock Exchange.
In a second move Imation said that, "In January 2015, the Board of Directors approved investing up to 25% of the Company’s excess cash in investment funds with the focus on producing attractive risk-adjusted rates of return while maintaining liquidity."
It has gone ahead and done just that:
On February 8, 2016, the Company entered into a subscription agreement to invest up to $20 million of its excess cash from various Company subsidiaries in the Clinton Lighthouse Equity Strategies Fund (Offshore) Ltd.
This fund is controlled by the Clinton Group and Joseph De Perio, Imation's chairman, is a senior portfolio manager in the Clinton Group.
So Imation, currently capitalised at less than $25m, has an approximate $80m pile of cash. Truly valuing publicly owned companies is a form of art, like surrealism.
We're told "Clinton Lighthouse is a market neutral fund which provides daily liquidity to its investors." It supplies cash, in other words.
Imation added: "The Board of Directors, in conjunction with management, reviewed various funds and voted to approve this investment, with Mr. De Perio abstaining from the vote. Management will continue to seek out and evaluate other attractive investment options under its cash management policy."
It's good to see that the proprieties were observed.
Currently the Clinton Group has its activist investor hooks into Violin Memory, where it is threatening to nominate its own directors to Violin's board in an attempt to exert more influence on that troubled company and get more cash returned to shareholders.
Did it just get its hands on $20m of Imation's cash to buy more Violin shares? ®