RailAmerica Inc. was one of the top performing stocks among Jacksonville-based companies in the first half of the year, but not because of its financial performance.
RailAmerica’s stock is being pushed higher by ongoing takeover speculation.
The rumors about a buyout started in May and forced RailAmerica to announce that it was having “preliminary discussions” about a possible sale.
RailAmerica, which operates 45 short-line railroads in 28 states and Canada, said it would have no further comment unless an agreement is reached.
The takeover talk sent RailAmerica’s stock up by 63 percent in the first six months of this year and the stock went even higher last week when Reuters news service reported that two other short-line railroad operators were showing interest in buying RailAmerica.
The two companies are Greenwich, Conn.-based Genesee & Wyoming Inc. and Pittsburg, Kan.-based Watco Companies LLC.
Currently, New York-based Fortress Investment Group owns 59.6 percent of the stock after acquiring RailAmerica in 2007 and selling off some its investment in an initial public offering in 2009.
Reuters said that private equity firms “have shown little interest in a deal” this time.
RailAmerica’s stock finished the first half of the year at $24.20, but it rose to a record high of $25.97 last week after the Reuters story, 74 percent above its price at the beginning of 2012.
Three companies beat RailAmerica’s return
Three Jacksonville-based companies produced better returns than RailAmerica in the first half of the year, led by a 177 percent jump in ParkerVision Inc.
ParkerVision, which is developing wireless radio technology, has been through many ups and downs over the years as investors speculate on the potential for its technology. The company currently is producing no revenue.
The stock started 2012 below $1 but has been on a big upswing since late May, pushing ParkerVision to $2.38 at the end of June.
Another low-priced stock, International Baler Corp., also had a big percentage increase in the first half of this year. The company, which produces baling equipment, rose 72 percent to $2.41.
The other big gainer was Lender Processing Services Inc., which produced a total return of 69 percent, including dividends.
LPS’ stock has fallen at times over the past two years on concerns about legal problems resulting from its role in the nationwide foreclosure mess. But with investors becoming less concerned about the financial impact of those legal issues, the stock has been on the rise this year.
At the other end of the spectrum, Body Central Corp. was the biggest loser, dropping 64 percent. The fashion retailer’s stock was pummeled after it lowered its sales and earnings forecasts twice in May and June.
Body Central has new chairman
Body Central announced last week that Martin Doolan retired as chairman of the board of directors due to health concerns. Doolan had been chairman since the company’s initial public offering in October 2010.
The board elected John Haley, a director since October 2010, to replace Doolan as chairman. Haley was a partner in accounting firm Ernst & Young before retiring in 2009.
Adecco sells Idea Integration
The Gores Group, a Los Angeles-based private equity firm, announced last week that it acquired Jacksonville-based Idea Integration Corp. from Adecco Group North America.
Idea is a technology consulting firm formed by MPS Group Inc., the Jacksonville-based company that was acquired by Adecco in 2010.
With the acquisition by Gores Group, Idea now is a standalone company still headquartered in Jacksonville.
Idea also announced that Rebecca Rogers Tijerino was appointed president of the company. She had been Idea’s senior vice president of application since January.
Gores Group said in a news release that the firm is focused on “acquiring controlling interests in mature and growing businesses which can benefit from the firm’s operating experience and flexible capital base.”
“Idea has established itself as a key provider of project-based IT solutions and support services. We are excited about partnering with the Idea team in establishing an independent platform for growth and innovation,” Gores Group Managing Director Victor Otley said in the release.
Terms of the deal were not disclosed.
Analysts say EverBank deal ‘favorable’
Analysts like EverBank Financial Corp.’s latest deal, a $2.51 billion acquisition of a commercial real estate loan business from General Electric Co.
“We view this as a favorable transaction for EverBank as it continues to remix its thriftlike balance sheet for higher multiple commercial banking activities,” Keefe, Bruyette & Woods analyst Jefferson Harralson said in a research note.
“We reiterate our outperform rating as we remain impressed with EverBank’s growth rate, improving profitability and intelligent acquisitions,” he said.
EverBank’s stock, which sold for $10 in its IPO two months ago, was priced at $10.87 before the deal was announced. But it rose above $11 last Monday after the GE deal announcement and jumped as high as $12.35 later in the week.
Raymond James analysts Michael Rose and Kyle Oliver rate EverBank as “outperform” and increased their price target on the stock from $13 to $14 after the announcement, although they still expressed some caution in their research note.
“We view the acquisition positively, but anticipate questions around integration/execution risk and future capital needs will weigh on investors’ minds and partially mitigate upside potential nearer term,” they said.
Harralson raised his price target on the stock from $14 to $15. According to Thomson Financial, analysts’ target prices for the stock range from $12 to $15. Four rate the stock as a “buy” and three at “hold.”
Battle over control of J. Alexander’s continues
The battle between management of J. Alexander’s Corp. and a large shareholder continued last week.
Jacksonville-based Fidelity National Financial Inc. announced two weeks ago that its restaurant subsidiary agreed to buy J. Alexander’s and add it to its portfolio of restaurant chains.
Atlanta-based Privet Fund L.P., which owns about 10 percent of J. Alexander’s stock and has criticized management in the past, is opposing the deal.
Privet had been seeking to elect two of its own representatives to J. Alexander’s board of directors before the Fidelity deal was announced.
Last week, it filed suit in Tennessee to force Nashville-based J. Alexander’s to hold its annual meeting already so shareholders can vote on the board.
“We have no trust in the board, we have no trust in management and, as a result, we have no confidence that every step has been taken (and will be taken) to properly represent our interests,” Privet said in a letter to shareholders.
Earlier last week, J. Alexander’s issued a news release defending the steps it took to reach a deal with Fidelity.
“The transaction with FNF is the culmination of a formal process to identify potential buyers designed to maximize value to shareholders of the company,” it said. J. Alexander’s began the process in September.
J. Alexander’s said its representatives contacted 16 potential financial buyers and seven potential strategic buyers before agreeing to the sale to Fidelity.
The sale agreement also allows J. Alexander’s to seek higher offers until July 22.
“During the go-shop period, the company has and intends to continue to engage in discussions with parties that previously expressed an interest in a potential transaction, as well as other potentially interested parties,” it said.
Weather hurts Stein Mart sales
Stein Mart Inc. reported last week that total sales for the five weeks ended June 30 rose by 0.2 percent to $104.7 million, but comparable-store sales fell by 0.5 percent.
Interim CEO Jay Stein said in a news release that bad weather in Florida and other markets challenged June sales for the Jacksonville-based fashion retailer.
“We are never satisfied with simply flat sales but given these disruptions, we are not uncomfortable with our results,” he said.
Stein Mart had 263 stores in operation at the end of June, up from 260 a year earlier.
Kowkabany retires from Jacksonville Bancorp board
Jacksonville Bancorp Inc. said in a Securities and Exchange Commission filing last week that former Neptune Beach Mayor John Kowkabany retired from its board of directors.
The 70-year-old Kowkabany stated health reasons for his retirement, the filing said. He had been a director since 1999.
Fiesta Restaurant Group hires former Winn-Dixie executive
Miami-based Fiesta Restaurant Group announced last week that former Winn-Dixie Stores Inc. executive Lynn Schweinfurth is joining the company as vice president and chief financial officer.
Schweinfurth had been vice president of finance and treasurer of Jacksonville-based Winn-Dixie since 2010. Winn-Dixie was acquired earlier this year by Bi-Lo LLC.
Fiesta operates the Pollo Tropical and Taco Cabana restaurant chains. It was spun off in May from Carrols Restaurant Group Inc. as an independent publicly traded company.
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Local Public company returns
Total return for Jacksonville-based public companies in the first half of 2012, measuring the increase or decrease in stock price plus cash dividends.
| Company | Return |
| ParkerVision | 177% |
| International Baler | 72% |
| Lender Processing Services | 69% |
| RailAmerica | 63% |
| Interline Brands | 61% |
| Web.com Group | 60% |
| Fidelity National Information | 30% |
| Regency Centers | 29% |
| Fidelity National Financial | 23% |
| Fortegra Financial | 20% |
| Stein Mart | 17% |
| EverBank* | 9% |
| Patriot Transportation | 8% |
| Landstar System | 8% |
| CSX | 7% |
| Rayonier | 2% |
| Global Axcess | -7% |
| PSS World Medical | -13% |
| Atlantic Coast Financial | -19% |
| Jacksonville Bancorp | -52% |
| Body Central | -64% |
* return since IPO on May 2