Stillwater Runs Shallow As Clinton Group Continues Proxy Fight For Stillwater Mining Company


Activist Investor cites poor strategy and performance in bid to replace board.

Clinton Group, Inc., a stockholder of Stillwater Mining Company (NYSE: SWC), launched a proxy fight to replace the new board of directors for Stillwater.

Clinton claims that “on every metric” that Stillwater management used to demonstrate “strong performance” in a recent presentation, its results deteriorated, including:

  • ounces of metal produced per worker have declined by 14%;
  • EBITDA margins have been cut by one-third; capital expenditures as a percentage of sales are up 50%; and
  • return on assets in the recycling business has been cut in half.

But, there’s a long-term strategy, right?  Only if that strategy involves losing money.  Clinton noted that to “execute on its vision:”

  • Stillwater overpaid for two public companies and did inadequate due diligence;
  • the stock is down 66% while the platinum group metals (“PGM”) basket price has gone up;
  • CEO pay has topped $5 million for two years in a row;
  • the Board reiterated its strategy of “identifying opportunities to establish a broader operating base, reducing the Company’s sole reliance on the Stillwater and East Boulder mine properties” by looking “around the world” for “various mineral exploration and development efforts” to acquire despite two over-priced, ill-conceived acquisitions; and
  • Stillwater has spent more than $525 million outside the United States on “mineral exploration and development” projects and less than half that amount on capital expenditures on domestic core properties.

Clinton claims its directors would do better and points to its successes:

  • Red Robin Gourmet Burgers (initial purchase of stock was at $16; at the time of the letter to stockholders traded at $44)
  • Sabra Health Care ($10 and $29, respectively)
  • Dillard’s ($18 and $80)
  • Radian ($4 and $10)
  • Sun Healthcare ($3 and the company sold for $8)
  • Charming Shoppes ($3 and the company sold for $7)
  • Collective Brands ($15 and the company sold for $21)
  • Hot Topic ($5 and the company sold for $14)
  • Select Comfort ($8 and $18)

We haven’t dug into those numbers to see how much of that performance is attributable to Clinton, but it is impressive.

The Stillwater Annual Meeting is on May 2.  We’ll keep an eye on this one.

The 2012 Stillwater Annual Meeting.

Clinton Group Proxy Statement
Clinton Group Presentation re: Enhancing Stockholder Value at Stillwater

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