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Hedge Fund Solutions: Activist Investment Campaigns, April 17

Hedge Fund Solutions will be doing a multi-part series via Valuewalk over the next month. The research firm’s catalyst equity research report weekly research highlighting activist investment campaigns.

See Highly Probable Activist Investing Targets here

Hedge Fund Solutions: Activist Investment Campaigns

Hedge Fund Solutions - Activist Investment Campaigns

Associated Estates Realty (AEC)

Activist Investor: Land and Buildings

Catalyst:

On April 15 L&B issued a letter calling for a re-balancing of the board in favor of shareholders’ interests.

http://www.sec.gov/Archives/edgar/data/911635/000090266415002205/p15-1130dfan14a.htm

Comment:

We initially covered AEC on November 17, 2014 when Land and Buildings announced plans to nominate 7 people to the board.

http://www.sec.gov/Archives/edgar/data/911635/000090266414004418/p14-2227exhibit_1.htm

On January 28 Land and Buildings held a conference call with 2 of its 7 director nominees to discuss its path to value improvement

On January 28 Land and Buildings issued a presentation highlighting opportunities to unlock value at AEC http://www.sec.gov/Archives/edgar/data/911635/000090266415000340/p15-0222dfan14a.htm

Land and Buildings sent a letter to the Chair and CEO of AEC commenting on its recent meeting http://www.sec.gov/Archives/edgar/data/911635/000090266415000510/p15-0376dfan14a.htm

On February 24 AEC issued a presentation to “set the Record Straight”

http://www.sec.gov/Archives/edgar/data/911635/000091163515000049/defa14afeb252015presentation.pdf

On February 27 Land and Buildings issued a press release calling for real change and highlighting the potential upside for shareholders under a reconstituted board.

http://www.sec.gov/Archives/edgar/data/911635/000090266415001434/p15-0844dfan14a.htm

On March 12 Land and Buildings announced it is nominating three candidates to the board.

http://www.sec.gov/Archives/edgar/data/911635/000090266415001709/p15-0913exhibit_1.htm

On March 13 AEC filed its preliminary proxy materials and set the annual meeting for May 22

http://www.sec.gov/Archives/edgar/data/911635/000119312515090227/d862541dpre14a.htm

On April 8 Land and Buildings sent a letter to AEC shareholders highlighting why change is necessary and seeking support for its three director nominees.

Dakota Plains Holdings, Inc. (DAKP)

Activist Investor: Lone Star Value

Catalyst:

Lone Star issued a press release urging DAKP to sell itself and expressed concern about the CEO’s plans to acquire assets rather than divest assets.

http://www.sec.gov/Archives/edgar/data/1367311/000092189515000939/ex991to3da509482011_04142015.htm

Comment:

We initially covered DAKP on June 17 when Lone Star disclosed a 5.5% “active” stake

On July 22 DAKP increased the size of the board from 6 to 7 and added one rep from Lone Star

http://finance.yahoo.com/news/dakota-plains-holdings-inc-appoints-124500377.html

On December 15, 2014 Lone Star sent a letter to the board recommending the Company create a MLP structure for the Pioneer Transloading Facility and initiate a strategic alternatives review process in order to create additional value for shareholders. http://www.sec.gov/Archives/edgar/data/1367311/000141588914003880/ex991to13da309482011_121214.pdf

diaDexus, Inc. (DDXS)

Activist Investor: Leap Tide Capital

Catalyst:

On April 17, 2015 DDXS agreed to expand the board by one member and add one representative from Leap Tide to the open position.

http://www.sec.gov/Archives/edgar/data/1036968/000092189515000979/ex991to13da307617007_041615.htm

Comment:

We initially covered DDXS on September 5, 2014 when Pessin disclosed a 4.9% “active” stake in DDXS

On October 17 Leap Tide disclosed a 7.7% “active” stake

On December 15, 2014 Leap Tide Capital increased its ownership from 7.7% to 8.9% and an avg. cost of $0.45/sh

On January 7, 2015 three DDXS directors resigned and were replaced by 2 new directors

On January 8 Norman Pessin increased his stake in DDXS to 8.9% at $0.57/share

On March 2, 2015 Leap Tide nominated two candidates to the board. The following day one candidate withdrew for unknown reasons following a call from the CEO

The Eastern Company (EML)

Activist Investor: Barington Capital

Catalyst:

On April 13, Barington filed its definitive proxy statement and delivered a letter to the Company demanding the board repeal recent bylaw amendments, revoke the recent nomination of a board member, and several governance changes, including declassify the board, implement a majority vote standard, adding clawback provisions to compensations plans, disclosing a CEO succession plan, etc…

http://finance.yahoo.com/news/barington-group-files-definitive-proxy-141500879.html

Comment:

We initially covered EML on March 17, 2014 when JAM Capital disclosed a 5.1% “active” stake in EML at an avg. cost of $13.07/share and announced it may present the company with opportunities to increase shareholder value. JAM sold all of its EML shares in April 2014.

On September 29, 2014 Barington Capital disclosed a 5.23% “active” stake for $15.55 and announced it has met with EML’s CEO and offered to help improve value organically and through acquisition. Barington also suggested two new board members. The board responded saying they have adequate in-house resources and do not intend to change the board at this time.

On January 14, 2015 EML rejected a 6.69/share cash + $12.43/share offer from Synalloy

On January 17 Minerva (6.0% at an avg. $14.15/sh) announced it is disappointed EML rejected a 6.69/share cash + $12.43 in shares bid from SYNL and believes it should hire an investment bank to examine a sale or substantial changes to its capital structure

On February 5 Barington sent a letter to the Chairman/CEO saying they will share plans to: (i) improve Eastern’s strategic focus, (ii) accelerate growth and product innovation in high-potential businesses, both organically and through targeted acquisitions, and (iii) improve Eastern’s corporate governance.

Barington also announced plans to nominate two individuals to the board.

On February 11 we reported that GAMCO had disclosed a 5.9% “active” stake for $16.98/share

On February 20 Barington nominated two candidates for election to the board.

On March 2 Barington filed its preliminary proxy materials to elect two directors.

http://www.sec.gov/Archives/edgar/data/31107/000139843215000083/a12694.htm

On March 9, Barington sent a letter to EML rejecting the board’s proposal to increase by two members and add one Barington representative.

http://www.sec.gov/Archives/edgar/data/31107/000139843215000089/exh99_5.htm

On March 27, Barington sent a letter to EML expressing its disappointment in the board’s decision to expand the size of the board after the annual meeting and appoint a new director, thus avoiding a shareholder vote for that individual. http://www.sec.gov/Archives/edgar/data/31107/000139843215000120/exh99_6.htm

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