The Activist Spotlight
By Barbara Thau
Dec. 24, 2010

Hedge fund MMI Investments sent a letter to the board of EMS on Dec. 20 to drive home its idea that the company should sell itself. "We have reaffirmed our conclusion that despite EMS' subscale and disjointed operations and its poor financial and stock price performance over the long-term, it remains a highly valuable franchise with assets that should be monetized through a sale of the company at a value substantially higher than its present stock price," MMI manager Clay Lifflander wrote.

The fund also sought to refute a Nov. 8 letter from longtime EMS Chairman John Mowell, in which he claimed the company has gained value.

Lifflander wrote that he believes "it is disingenuous to boast of the stock's performance since the day you had to replace your CEO because the company had just lost its largest contract, reported disastrous earnings and lowered its full-year EPS forecast by 35%, causing the stock price to plummet by 40% from the month prior. I can assure you your stockholders know all too well that 40% up after 40% down means you've still lost value."

MMI continues to urge the company to effect a sale, but hasn't put forward any activist proposals to force board change. The fund group currently owns 1,182,000 shares (7.7% of total outstanding).

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