A proxy loss, but Sherritt shaken

by James Kwantes, World of Mining

When the votes were counted Tuesday, activist investor George Armoyan had lost his bid to shake up Sherritt’s board.

But Armoyan, whose Clarke owns 5% plus of Sherritt’s outstanding shares, got a round of applause on enemy territory – Sherritt’s annual meeting in Toronto – after talking up Sherritt’s potential and progress toward enhancing shareholder value, according to this Financial Post report by Peter Koven.

If Sherritt’s stock continues to rise, George Armoyan gets the last laugh. (Halifax Chronicle-Herald photo)

The conciliatory speech was the velvet glove to Armoyan’s iron fist – his months-long campaign to force accountability on the chronically underperforming company through an infusion of new blood on its board.

After months of behind-the-scenes negotiations between Armoyan and the Sherritt board, the dissident shareholder criticized Sherritt CEO David Pathe publicly for musing about an acquisition after the sale of Sherritt’s coal and royalty business was announced in December. An acquisition seemed like a curious choice indeed for a debt-riddled company that has had trouble turning a profit on existing operations.

Until Armoyan launched his proxy fight, the stock had been a horror show by almost any metric. But with ownership of less than .25% of outstanding shares, executives and directors have little “skin in the game” – a situation that persists despite this week’s endorsement by voting shareholders. Hoping for change to come organically under these circumstances seems like a stretch.

Year-to-date, buoyed by a sharp increase in the nickel price and pricked by the sharp criticisms of Armoyan, Sherritt stock is up about 19% (Clarke shares are up 14%, including an 8% rise Monday after a robust Q1 report).

Armoyan told the Financial Post he plans to remain an active and involved shareholder. “I’m not the smartest guy in the world. (But) I’m the most persistent son of a bitch you’ll ever meet,” Armoyan said.

Sounds like he’s just what the doctor ordered for Sherritt.

Disclosure: I was recently stopped out of Sherritt shares and no longer own the stock, although it’s on my radar. I own Clarke shares. This is not investment advice; do your own due diligence and please read my disclaimer.

Related reading:

Sherritt and Clarke: Nickel for your thoughts | World of Mining

Fight Club, Canadian-style | World of Mining

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