An activist investor once described as the “boogeyman” who strikes fear in bankers has taken an interest in Jacksonville-based Atlantic Coast Financial Corp.
In a filing with the Securities and Exchange Commission, PL Capital Group said funds affiliated with the firm have acquired a 6.4 percent stake in the parent company of Atlantic Coast Bank.
According to the firm’s website, PL Capital specializes in buying stakes in “undervalued” banks that are “in need of a catalyst to unlock shareholder value.”
The principals of the firm “engage in shareholder activism (when needed) including proxy contests, board representation, shareholder proposals, etc. to unlock shareholder value,” the website said.
A 2013 story in Crain’s Chicago Business went a step further, describing PL Capital co-founder John Palmer as “the scariest ex-accountant you’re ever going to see if you’re a banker.”
Crain’s promoted the story on its Facebook page with the headline: “This boogeyman scares small banks.”
PL Capital officials must have liked that headline because it’s posted with a link to the story on the front page of its website.
Atlantic Coast Financial just went through a proxy battle with shareholders two years ago when a group led by former Chairman Jay Sidhu opposed a buyout agreement with a South Florida bank.
Shareholders voted down the buyout and in the aftermath, management of the company was overhauled. Atlantic Coast Financial brought in John Stephens as CEO in September 2013.
Since the new management took over, the company has turned its fortunes around. Atlantic Coast Financial recorded its first profit in seven years in 2014.
PL Capital acquired its shares in Atlantic Coast Financial at the end of July, according to its SEC filing.
The filing says the firm “intends to discuss with the management of the company what their short and long term plans are to grow the franchise and improve profitability, and then monitor their progress at implementing those plans over time.”
It also said PL Capital may buy more Atlantic Coast Financial shares but intends to keep its stake below 10 percent.
According to Atlantic Coast Financial’s most recent proxy statement, seven investment firms own more shares than PL Capital, but all have less than 10 percent of the company’s stock.
Stephens did not respond to two voice mail messages last week about PL Capital’s filing.
PL Capital’s interest seems to be helping Atlantic Coast Financial’s stock. It has risen from about $4.50 at the end of July to a 52-week high of $6.15 last week.
Jacksonville Bancorp profits up
Jacksonville Bancorp Inc. last week reported third-quarter earnings of 54 cents a share, more than tripling its third quarter 2014 earnings of 16 cents.
The parent company of The Jacksonville Bank said it reduced its level of non-performing assets to 1.98 percent of total assets as of June 30, compared with 4.6 percent a year earlier.
Non-performing assets include bad loans and real estate acquired through foreclosure.
“The positive performance we’re experiencing today in all of our core fundamental areas is the result of our ongoing commitment to credit quality improvement objectives, asset growth and balance sheet restructuring efforts, as well as the re-engineering strategies we have undertaken to operate our company in the most efficient manner possible,” CEO Kendall Spencer said.
ParkerVision has deferred revenue
ParkerVision Inc. reported another quarter without any revenue on its income statement last week, but the developer of wireless technology did add deferred revenue to its balance sheet.
As Chief Financial Officer Cindy Poehlman explained in the company’s conference call, Jacksonville-based ParkerVision shipped initial wireless component products to distribution partner RFMW Ltd. As RFMW ships those components on to its customers, ParkerVision can recognize the sales on its income statement. Until then, the $20,000 is carried as deferred revenue.
Unfortunately, $20,000 in sales won’t put a dent in its finances. Even after reducing its personnel costs by 40 percent by cutting jobs two months ago, ParkerVision expects to use up $2 million to $2.5 million per quarter in cash, Poehlman said. So ParkerVision will have to generate a lot more sales of its technology, which it says improves the performance of wireless devices.
The good news is that Jon Hickman of Ladenburg Thalman, the only analyst covering ParkerVision, sees more revenue coming from the company’s relationship with RFMV.
In a research note last week, Hickman said ParkerVision is also providing engineering services to RFMW clients.
“We believe these engineering services contracts represent a real and meaningful new revenue source for ParkerVision and could materially reduce the company’s current quarterly cash burn,” he said.
Of course, the big headlines at ParkerVision involve its continuing legal battle with Qualcomm Inc., which ParkerVision alleges has been infringing on its patented technology. ParkerVision suffered a big loss last month when a federal appellate court denied its appeal of a lower court’s ruling in favor of Qualcomm.
In the conference call, CEO Jeff Parker said the company intends to appeal for a rehearing on the matter, but that could be a longshot. “Petitions for rehearing are not often granted. However, in cases where error can be shown, such petitions have been known to be granted,” Parker said.
Parker believes there were errors in the court’s ruling, but he said he didn’t want to detail them until the company files its petition.
“This ruling, though a serious setback, is not (as some assume) the end of ParkerVision as an operating entity. We continue to believe that ParkerVision’s technology and patent portfolio has value that can yet be realized,” Hickman said.
ParkerVision has a second infringement lawsuit pending against Qualcomm and other companies. Hickman thinks the company has a good chance of collecting damages from that suit.
Parker said he remains optimistic overall despite the lack of sales and the courtroom losses, which have depressed the company’s stock.
“I know it’s probably challenging to remain patient. But in these trying situations, I think the most appropriate thing for management to do is to remain steady as she goes, get to the goal and don’t get distracted,” he said.
APR stock falls again
APR Energy plc’s stock fell to another new low last week after the Jacksonville-based company announced another write-off related to Middle East operations.
APR, which provides interim power plants around the world, said it would take a $24 million write-off in the second quarter because of its “inability to enter Yemen to safely demobilize and remove the assets” of a power project there. APR had earlier said it was terminating the project because of “the escalating conflict in that country.”
The company did say that it received a $10.7 million payment during the second quarter to cover part of the receivables outstanding from a contract in Libya, after it pulled out of that country because of dangerous conditions.
After the announcement, APR’s stock fell by as much as 13.75 pence Wednesday to a new low of 85p (about $1.33) in trading on the London Stock Exchange. The stock had traded above 1,000p as recently as January 2014.
Second analyst issues ‘buy’ on General Employment
For the second week in a row, an analyst began coverage of General Employment Enterprises Inc. with a “buy” rating.
Just like the previous “buy” rating issued by Roth Capital Partners analyst Jeff Martin, Maxim Group analyst Brian Kinstlinger said in his report last week that Derek Dewan’s experience growing Jacksonville-based MPS Group Inc. into a major staffing company is a reason to take note of General Employment.
“Mr. Dewan was named CEO in April 2015 and brings significant credibility to General Employment, in our view,” Kinstlinger said.
He expects Dewan to improve General Employment’s competition position.
Kraft Heinz cutting jobs
After completing its merger last month, The Kraft Heinz Co. last week said it was cutting about 2,500 jobs, but none of the cuts involve factory workers, according to The Associated Press.
The food company’s vast operations include the Maxwell House coffee plant in Downtown Jacksonville that employs more than 200 people.
Job cuts have been expected since Kraft Foods Group Inc. and H.J. Heinz Co. announced their merger in March. Management of the merged company is led by officials of investment firm 3G Capital, which has a reputation for slashing jobs.
Kraft Heinz has said it expects to cut $1.5 billion in annual expenses by the end of 2017.
According to the AP story, about 700 of the job cuts are coming at the former Kraft headquarters in Northfield, Ill., where about 1,900 people work. Kraft Heinz has total employment of more than 46,000.