The Wall Street Journal-20080116-Fund-s Purchases Fail To Lift Coleman Cable
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Fund's Purchases Fail To Lift Coleman Cable
New York hedge fund Jana Partners LLC has joined Coleman Cable Inc. insiders in buying company shares, but the purchases have done little so far to shore up its flagging stock price.
Jana and five company insiders bought a combined $2.73 million in shares of the maker of electrical and electronic wire and cable products this month, but Coleman Cable's stock is still just above its all-time low.
Jonathan Moreland, adviser to Ladenburg Thalmann Asset Management Inc. on insider strategies, said the recent purchases constitute a "solidly bullish insider signal," but he cautioned that only investors with a long-term horizon should look to follow the insiders' lead.
"Clearly, this is not something you have to jump into today," Mr. Moreland said. "But I think these are perfectly good indications of longer-term value: both a slew of insiders and a smart value investor."
Representatives for Coleman Cable and Jana Partners didn't return calls seeking comment.
Coleman Cable, of Waukegan, Ill., priced its initial public offering last March at $16 a share, and Jana disclosed a 6.85% stake in the company later that month. After reaching a 52-week high of $30.30 in June, company shares lost 43% in one day in August on a disappointing second-quarter earnings report.
That month, after the plunge, Jana Partners and several insiders bought $9.62 million of stock, according to data provider Washington Service. Jana Partners and company executives bought an additional $1.42 million in stock in November and December, and this month, five insiders bought about $900,000 in stock, while Jana Partners bought about $1.83 million of the shares. Jana Partners now owns a 16.3% stake in the company.
The company's shares, meanwhile, continued its decline and yesterday ended on the Nasdaq at $8.30, 50 cents above its 52-week low.
Coleman Cable said in November that it continued to "experience inflationary cost pressures from higher material and fuel costs," but partially offset those increases through cost-cutting measures. While its third-quarter earnings fell, net sales more than doubled, thanks to its $215 million acquisition in April of wire-products maker Copperfield LLC.
Jana Partners, which has taken an activist stance with a number of its investments, reported its Coleman Cable stake as a passive investor, suggesting that it has no immediate plan to push for change. Mr. Moreland said Jana Partners is a value investor that doesn't hesitate to bail out of a stock, and its continuing purchases show "they obviously still like what they see long-term and they're sticking with it."
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