Thoughts on the MFC Industrial (MIL) / Kellogg / IAT situation?

by stockinup | December 13, 2013 10:45 am

Has anyone delved into this proxy battle in depth? I’d appreciate hearing your thoughts on the players, the assertions, and what you think the motives are. Thanks in advance!

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  1. Avatar
    Dec 13 2013, 10:48:23 am

    As a reframe of the question, it seems that the proxy issue may be resolved but the question remains as to what you guys/gals think about the Kellogg / IAT interest and the back/forth between MFC’s management and it’s 30+% shareholder.

    • 12558 |
      Travis Johnson, Stock Gumshoe
      Travis Johnson, Stock Gumshoe
      Dec 13 2013, 11:03:54 am

      I’m not exactly delighted by it, particularly by the disclosure or lack thereof from Kellogg, but activism is understandable given MFC’s acquisitions and their falling share price. This fight with a major shareholder is tough to figure out in part because MFC management likes to keep their cards pretty close to the chest. My investment interest hinged quite a bit on their ability to realize some value in relatively short order from their acquired natural gas assets, not so much on their continuing buildup of a commodities distribution system, so I’m continuing to re-evaluate now that we’re at close to a 25% loss since I covered them. I’m not sure what I’m going to do yet, but the valuation is compelling unless you think Michael Smith has really lost his strategic vision. He has done very well for investors in the past, so I continue to give him some benefit of the doubt and the stock has not been punished as much as some commodity companies, but I have a hard time deciding on a course of action with this one.

  2. Avatar
    Dec 13 2013, 12:07:53 pm

    Thanks, Travis. Maybe we’ll get more info about the inner life of the company as a byproduct of the activism and a little better idea of what’s going on with the planning.

    • Avatar
      Dec 14 2013, 02:36:50 pm

      Josh, supposedly, MIL acquired Compton for far less than its value so the acquisition boosted MIL book value but the deal wasn’t favored for reasons that I have not fully explored — some shareholders believe that Compton had problems when acquired or the Compton valuation was not correct. Just wasn’t a beloved transaction, as far as I can tell, and the share price has been suppressed because of it. Travis? Anyone have better insight?

  3. Avatar
    Dec 16 2013, 11:57:21 am

    Looks like proxy battle is still on. Kellogg rejected the two seats offered to independent directors by MFC. Still with Travis — having a hard time deciding course of action. Some indep proxy advisor advised against Kellogg proxy, according to MFC, but altogether situation is still murky. Not many “whys” in this.

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