Ruby Tuesday Inc (NYSE: RT), owner of the eponymous casual dining restaurant chain, owns and operates 656 restaurants and franchises operations in 14 foreign countries. The company’s shares have performed poorly this year, down 15.6% (as of 7/1). This performance has attracted the interest of activist investor Carlson Capital. According to Market Folly:
Clint Carlson’s hedge fund firm Carlson Capital filed a 13D with the SEC signifying their activist investment in Ruby Tuesday (RT). Due to trading on June 7th, 2011, Carlson has disclosed a 5% ownership stake in RT with 3,250,000 shares.
This marks over a 10,800% increase in their position size (they only owned 29,800 shares at the end of the first quarter). Carlson’s stake in total was purchased with $33.6 million.
Activist Investment
The 13D filing was made in conjunction with Becker Drapkin Management and for activist purposes the two have filed as a “group.” Collectively, the group owns 4,143,900 shares of Ruby Tuesday (including 200,000 shares of underlying call options exercisable until October 22nd, 2011). In total, this represents 6.4% of outstanding shares.
While they originally purchased shares because they believed they were undervalued, the “purpose of transaction” section of the regulatory filing outlines that Becker Drapkin is seeking to nominate directors at the company’s annual meeting.
It is worth noting that Carlson Capital filed its SC 13G with the SEC in combination with Becker Drapkin, another investment firm. On 7/1, the parties jointly filed this press release:
Ruby Tuesday, Inc., Becker Drapkin Management, L.P., and Carlson Capital, L.P. today announced that Steven R. Becker and Matthew A. Drapkin have been appointed as independent members of the Board of Directors of Ruby Tuesday, effective June 30, 2011.
In connection with the appointment of Messrs. Becker and Drapkin to the Board of Ruby Tuesday, Becker Drapkin has agreed to withdraw its separate nomination of Mr. Becker, Mr. Drapkin, and Michael Brodsky to the Board of Directors and to vote in favor of each of the Board’s nominees for election at the 2011 Annual Meeting of Shareholders.
The appointment of two activist investors to the Board of Directors suggests the company is ready for a fresh perspective, which may help add value for shareholders.
As of 7/1, Covestor’s Deep Value model held RT. Deep Value is managed by Analytic Investment LLC.
Sources:
Price performance from Google Finance, as of 7/1. http://www.google.com/finance?q=rt
“Carlson Capital Goes Activist on Ruby Tuesday (RT)” Market Folly. 6/21. http://www.marketfolly.com/2011/06/carlson-capital-goes-activist-on-ruby.html
“Ruby Tuesday Appoints Steven Becker and Matthew Drapkin to the Board of Directors” Company Press Release, 7/1. https://seekingalpha.com/news-article/1364081-ruby-tuesday-appoints-steven-becker-and-matthew-drapkin-to-the-board-of-directors
