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In SEC Filing, Activist Hedge Fund Catches Board Member Sleeping

by Mark Melin

Activist hedge fund Stillwell Value Partners is getting personal in its attacks on a small bank that seems to be sleeping on the job, literally.

In SEC Filing, Activist Hedge Fund Catches Board Member Sleeping

Stillwell, which has been involved in a fight with Harvard Savings Bank to encourage the company to sell, caught a picture of the bank’s chairman sleeping at an annual meeting.  In a Schedule 14A SEC filing, Stillwell posted the picture with a caption that read “If you, like me, believe it’s time to bring a fresh influence to our Bank’s board of directors, please vote the green proxy card for Mark Saladin,” which is Stillwell’s choice for the board.  The SEC filing noted that no one on the board bothered to wake up Board Chairman Donn Claussen.

Picking on sleepy regional banks

The activist Wall Street hedge fund has a reputation for picking out regional banks troubled in the low interest rate market environment.  Harvard Savings Bank is a good example.  When Stillwell was immersed in his takeover battle in the spring of 2012, and the company’s stock was trading just under $10 per share, the breakup value of the company was estimated at $16 per share. The bank posted profits of just $4,000 in 2012 yet Claussen took over $120,000 in compensation.

Fighting activist hedge fund, bank says directors must live in neighborhood

Stillwell has engaged the small-town Harvard Savings Bank, with just under $200 million in deposits sitting on the Wisconsin / Illinois boarder and serving a mix of farmers and well-healed Chicago escapees, on several levels. After Stillwell’s desires were known, for instance, the bank adopted a by-law that mandated board members live within 15 miles of either of the bank’s branches in Harvard or Morris Illinois.  Not to be thwarted, Stillwell recruited local board members to run and shake up the bank’s board.

Stillwell’s fund, which has invested in various regional banks in approximately 30 such opportunities around the country.  His activist strategy with Harvard Savings has paid off, as the stock is trading at $17, steadily climbing after Stillwell became involved in the board battle.

Author: Mark MelinMark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com