By Fintel. Originally published at ValueWalk.
Julian Singer, the son of famed activist investor Paul Singer of Elliott Management, said his JDS1 fund boosted its ownership stake in Catalyst Biosciences Inc (NASDAQ:CBIO) by 53% to 2,014,832 from 1,312,532.
In a 13D filing with the US Securities and Exchange Commission, Singer, under the corporate name of JDS1, said he bought the shares because he and a group of other investors on May 9 said they planned to solicit proxies at the company’s 2022 annual meeting.
Singer and the group nominated three directors, Shelly C. Lombard, Matthew Stecker, and Igor Volshteyn. It also wants Catalyst to declassify its board and change its bylaws to elect directors every year.
The shareholders are upset that Catalyst, on May 23, disclosed its acquisition of Vertex Pharmaceuticals Inc. but failed to provide adequate transparency.
In the filing, Singer said, “the issuer’s announcement of the asset sale comes nearly three years after JDS1, in its July 22, 2019, letter, first called upon the issuer to retain a financial adviser to assist it in exploring strategic alternatives, when the shares’ closing price was $8.32 per share. While the per-share price of the Shares had traded up since the issuer announced the Asset Sale, based on the per-share closing price of $1.34 on May 24, 2022, the per-share price of the Shares is still down approximately 84% since July 22, 2019, when JDS1 first called upon the issuer to explore strategic alternatives.”
The group said it believes that absent a proxy fight, there is no way to hold the board accountable for the roughly 67% share price fall over the last year.Singer said he his allies strongly believe that most of the Catalyst’s cash and cash equivalents should be distributed to stockholders, and he urged the company to set a date for its annual meeting and a vote on their proposals.
“Accordingly, Singer said, “unless the issuer moves quickly to publicly commit to an expeditious distribution of the cash and cash equivalents on its pro forma balance sheet to stockholders, save for whatever it needs to retain to provide for contingent liabilities and administrative expenses. (Our) plans for a proxy contest at the 2022 Annual Meeting remain unchanged.”
Besides Singer, institutional sentiment in CBIO is generally negative. Fintel’s ownership accumulation score is 14.87, which indicates significant selling by institutions and funds. The number of funds reporting position in CBIO declined by 8% in the last quarter, and average portfolio allocations declined by a whopping 79%. Total shares owned by institutions reported in 13F and NPORT filings declined by 36% (excluding 13D and 13G filings).
Article by Greg Morcroft, Fintel
Sign up for ValueWalk’s free newsletter here.