Thursday, 26 May 2016
Last updated 12 hours ago
Oct 1 2013 | 10:28am ET
Clinton Group thinks that Nutrisystem Inc.'s balance sheet is looking a little heavy.
The activist hedge fund said yesterday that it had increased its stake in the weight-loss product company and pushed Nutrisystem to increase its dividend. Clinton, which launched its activist campaign last year and won the appointment of a new CEO, said that the company is undervalued and that the higher dividend could reduce the stock's volatility.
"Given our enthusiasm for all that you are doing and for the company's assets and opportunities, you can imagine how bewildered we are by the stock price," Clinton wrote to Nutrisystem CEO Dawn Zier.
The hedge fund said, based on estimated free cash generated over the next two years and current cash-on-hand, Nutrisystem's stock price should more than double over the period. It said the company could boost its dividend by as much as 50%.
"Given the fundamental turnaround on the horizon and the opportunity for an increased dividend, we are surprised the stock is not trading over $20 today," Clinton wrote. "We believe as you demonstrate the success of your efforts in returning the company to its direct marketing roots this coming diet season, the investment community will recognize the company's opportunities and the strength of its business model and assets."