who are yume?18 Dec 2015 17:08
YuMe: Activists At The Gate
Nov. 25, 2015 4:18 PM ET | 2 comments | About: YuMe, Inc. (YUME)
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Summary
A couple of activist investors now own over 15% of the company.
They've been aggressively adding to their positions.
The company still has plenty of upside on the back of mobile ad growth.
Vertex Capital and AVI Partners have increased their stakes in YuMe (NYSE: YUME). Today, Vertex owns 7.2 percent of the multi-screen video advertising company while AVI maintains 8.1 percent of the business.
So what does this news mean for YuMe and its shareholders? Despite the recent moves from Vertex and AVI, YuMe's stock price has plummeted since the end of June.
At the time, YuMe's stock price was around $5.50 - the price is now closer to $3 a share. Although Vertex and AVI have upped their stakes in YuMe, other investors are reluctant to commit any capital to the company.
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yume stock
Are investors shying away from YuMe?
2015 has been an up-and-down year for many companies, and YuMe is no exception - consider some of mixed bag of AVI's recent moves involving YuMe:
AVI disclosed a 5.5 percent "active" stake in YuMe on Jan. 15 - the investment firm increased its stake to 8.1 percent in February and 9.1 percent in March.
In addition, AVI announced it nominated two candidates to YuMe's board of directors in March but withdrew the nomination notice in April. However, AVI said it expected one of its directors to join YuMe's board at a later date.
On July 21, AVI upped its ownership to 10.8 percent at an average cost of $5.24 per share.
On Oct. 5, YuMe added Derek Harrar, the former senior vice president and general manager of video services at Comcast (NASDAQ: CMCSA) (NASDAQ:CMCSK), as AVI's representative on its board.
In addition, let's consider Vertex's moves relating to its stake in YuMe:
On Oct. 7, Vertex disclosed a 5.3 percent "active" stake in YuMe and said the business was materially undervalued. Vertex also recommended the company should explore strategic alternatives at this time.
Vertex this month increased its ownership to 7.2 percent and asked the company's board to commit to a $35 million share buyback at $3.50 per share. This buyback could result in EBITDA accretion of greater than 40 percent on a per-share basis, according to Vertex.
YuMe meanwhile has suffered financial losses over the past year. In the third quarter of 2015, YuMe recorded:
Revenue of $38.9 million, compared to $43.0 million in the third quarter of 2014.
Adjusted EBITDA loss of $2.8 million, compared to an adjusted EBITDA loss of $0.4 million in Q3 2014.
Net loss of $6.5 million, or $0.19 per diluted share, compared to a net loss of $3.0 million, or $0.09 per diluted share, in Q3 2014.
YuMe may require a strategic shakeup if it hopes to avoid ongoing financi