An Australian investment firm has acquired nearly 10 percent of Atlantic Coast Financial Corp.'s stock and plans to vote against the banking firm's proposed merger with a South Florida bank, according to a Securities and Exchange Commission filing last week.
Affiliates of The Albury Investment Partnership of Sydney bought two large blocks of Atlantic Coast Financial stock in late March, bringing its total investment to 262,000 shares, or 9.97 percent of all shares outstanding. That makes it the largest stockholder of the Jacksonville-based banking company.
Albury's filing said it intends to vote those shares against the company's planned merger with Bond Street Holdings Inc.
Two Atlantic Coast Financial board members, Jay Sidhu and Bhanu Choudhrie, who own a combined 6.6 percent of the company's stock, already have said they will vote against the deal. Sidhu and Choudhrie combined have the second-largest block of shares in the company.
The merger agreement announced in February calls for the company's subsidiary, Atlantic Coast Bank, to merge into Bond Street's bank subsidiary, Fort Lauderdale-based Florida Community Bank.
Sidhu, a former chairman of Atlantic Coast Financial, has been clashing with other board members for the past year over the company's strategy. According to a proxy statement filed by the company last month, the board of directors voted 7-2 to approve the merger agreement with Bond Street, so it appears all directors except Sidhu and Choudhrie support the deal.
Before the merger agreement was announced in February, Sidhu had proposed replacing three current Atlantic Coast Financial board members with three of his own nominees. Albury's SEC filing last week said it will support Sidhu's nominees if that comes to a vote.
Albury bought 95,946 shares on March 23 for $4.44 a share and acquired another 38,554 shares on March 25 for $4.79 each, according to the filing.
Atlantic Coast Financial's merger agreement with Bond Street calls for stockholders to get up to $5 per share, but they will only receive $3 when the deal is completed. The other $2 will be put into an escrow account that will be held for up to one year to pay any legal costs arising from stockholder claims against the company.
Albury said in its filing that it has no other plans for its investment in Atlantic Coast Financial. However, it did say as part of an "ongoing evaluation," the firm and its affiliates may in the future "hold discussions with or make formal proposals to management or the board of directors of the issuer or other third parties" regarding the company's business.
Analyst 'cautious' on CSX earnings
First-quarter earnings season for Jacksonville companies kicks off this week with CSX Corp., which is scheduled to report its results Tuesday.
Cowen Securities analyst Jason Seidl said in a research report last week that he is "somewhat cautious" about the upcoming earnings reports from railroad companies.
"We are especially cautious on Canadian National, which encountered tougher weather conditions than most carriers, and CSX, which underperformed our traffic growth assumptions," he said.
Seidl also said five consecutive weeks of declines in fuel prices will not help railroads' earnings, because they are offset by a spike in prices earlier in the first quarter.
Stein Mart comp sales drop
Stein Mart Inc. last week reported that comparable-store sales dropped 2.8 percent in the four-week period ended April 6.
In a news release, interim CEO Jay Stein said the early Easter holiday this year affected the results.
"March sales were adversely impacted by much colder weather compared to last year and, of course, the lost selling day due to the earlier Easter which represents nearly two percentage points of the comp sales decrease. Our comparable store sales were positive until the last week of the month when the anticipated lower post-Easter selling occurred," he said.
Stein said it will be more significant to look at March and April sales combined "to get a true picture of our spring selling season."
Comparable-store sales are sales at stores open for more than one year and are considered a key indicator of a retailer's performance.
Solar Energy Initiatives closes everything
Solar energy company First Solar Inc. was one of the hottest stocks in the market last week, which reminded me that I haven't checked up recently on the status of Solar Energy Initiatives Inc.
Solar Energy Initiatives was a Ponte Vedra Beach-based company that originally set up a training center on Jacksonville's Northside in 2009 to teach people how to install solar systems. It also made several announcements of major solar projects.
However, the company closed its local offices and disappeared from view two years later. SEC filings indicated it had moved its offices to South Carolina.
The company recently filed a report with the SEC for the quarter ended Jan. 31, which confirmed that it is out of business, but the publicly traded shell corporation still exists.
"During the quarter ended January 31, 2013, the company closed all of its subsidiaries, which all were dormant, and has undertaken a review of its ongoing operating activities in the solar energy markets," the filing said.
"The company has also pursued plans to acquire the assets of an entertainment consulting firm. The company has not yet signed a definitive agreement and the close of the acquisition would be contingent upon the company raising funds sufficient to pay the purchase price and to support the operations of the company," it said.
By the way, the company's corporate address is now in Boca Raton.
Solar Energy Initiatives, when it was still operating in Ponte Vedra Beach, spun off a subsidiary called Solar Park Initiatives Inc. as a separate public company. That company hasn't filed any quarterly reports with the SEC since 2011.
Positive news for Northrop Grumman
While defense contractors are dealing with federal government spending cuts, there has been some positive news for Northrop Grumman Corp.
Despite the cuts, Northrop is planning a major expansion of its St. Augustine aerospace facilities, and one analyst said last week that Northrop will not feel as big an impact from the federal budget as other defense contractors.
Northrop has "the lowest financial leverage in the group, and our sequestration-related earnings adjustments for the company are not as significant as they are for some of its peers," J.P. Morgan analyst Joseph Nadol said in a research report.
He upgraded his rating on Northrop from "underweight" to "neutral."
Nadol does expect Northrop to look at shedding some operations because of the budget cuts, but at least the impact of sequestration won't be felt locally, where Northrop is the largest corporate employer in St. Johns County.
The Board of County Commissioners two weeks ago approved an incentive package of nearly $3 million for an expansion of Northrop's St. Augustine facilities.
According to its application filed with the St. Johns County Economic Development Agency, Northrop plans to construct three manufacturing and office buildings totaling 330,000 square feet. The company, which employs 1,100 in St. Augustine, will add 400 good-paying jobs within four years as part of the expansion.
J.P. Morgan analyst downgrades J&J
Meanwhile, another company that is expanding its Northeast Florida operations was downgraded by a J.P. Morgan analyst last week.
Analyst Michael Weinstein downgraded his rating on Johnson & Johnson from "overweight" to "neutral" after a 30 percent runup in the stock price in recent months, which increased its market capitalization by $54 billion.
Weinstein said in his research report that Johnson & Johnson was trading at a 5 percent discount to its sum-of-the-parts value when he upgraded the stock last June. Now it's trading at an 8 percent premium.
"Overall, we'd characterize our view on J&J at this point as constructive, but with the stock price appreciation over the last 9 months, the $54 billion in added market cap and a valuation at an 8 percent premium to its SOTP today, we see better opportunities in the space," he said.
Johnson & Johnson's Jacksonville-based contact lens subsidiary, Vistakon, received City approval earlier this month for a $12 million addition to its Southside distribution center.
Taylor Morrison goes public
Homebuilding company Taylor Morrison Home Corp. went public last week by selling 28.6 million shares for $22 each.
Scottsdale, Ariz.-based Taylor Morrison operates in 10 of the 25 largest U.S. homebuilding markets, including Jacksonville. The company reported earnings of $430.8 million on revenue of $1.4 billion in 2012.
With the stock market peaking, the timing was perfect for an initial public offering. Taylor Morrison had announced the previous week that it expected to sell 23.8 million shares at $20 to $22 each, but it increased the number of shares and priced the offering at the top of its expected range.
The stock rose $1.04 on its first day of trading Wednesday to close at $23.04.
Taylor Morrison trades on the New York Stock Exchange under the ticker symbol "TMHC."
An IPO in Firehouse's future?
Speaking of IPOs, it may be time to speculate on a possible future public offering by Firehouse Subs.
The Jacksonville-based chain of sub shops last week announced that sales grew from $285 million in 2011 to $385 million in 2012, with a same-restaurant sales increase of 7.8 percent.
This announcement left two impressions:
This is the first time I've seen Firehouse announcing sales totals to the public.
Secondly, $385 million in sales is a sufficient size to attract interest on Wall Street.
So let's keep an eye on Firehouse.
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