Clinton Pushes Nutrisystem To Boost Dividend As It Boosts Stake

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."


In Depth

MiFID2 For U.S. Firms: Key Questions Answered

Feb 27 2017 | 4:54pm ET

The January 2018 deadline for implementation of the EU’s mammoth MiFID2 regulations...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

iCapital Network: The Trump Effect On Direct Lending

Feb 23 2017 | 4:21pm ET

The arrival of the Trump Administration has raised questions among private debt...

 

From the current issue of