NEW YORK -- Activist hedge fund MMI Investments L.P. is pushing for change at DHT Holdings Inc. (DHT), parent of oil tanker company DHT Maritime Inc., which has been withholding its quarterly dividend.
MMI, a New York-based hedge fund run by Clay Lifflander, is DHT's largest shareholder and owns 8.9% of the company's stock. In a critical letter to the chairman of DHT's board Tuesday, MMI said that it's frustrated with the company's poor stock performance and strongly urged DHT's board to reinstate the company's quarterly dividend and appoint Robert Cowen, a shipping industry veteran and an adviser to MMI, to its board.
DHT did not immediately return calls or an email seeking comment.
DHT's stock is now near its all-time low and the company's valuation is at a severe discount to that of its peer group, MMI says in a letter to Erik Lind, chairman of DHT's board. MMI, also known as Millbrook Capital Management Co., lays the blame squarely at the door of DHT's executives.
"We believe this underperformance is directly related to repeated poor decisions by management and the board, such as the elimination of the company's dividend and that stockholder value will continue to erode unless immediate action is taken," writes Lifflander, MMI's president.
MMI, which set up business in 1996 and has a track record of aggressively and successfully forcing change at companies, says that DHT's board should immediately reinstate its quarterly dividend at 10 cents a share. DHT's shares fell by more than 21% on the day the dividend's elimination was announced in September, and has dropped a total of 30.7% in the six months since it was eliminated, the hedge fund said.
DHT's stock price is currently at a 75% or greater discount to its value at its peers' average multiples of 2010 and 2011 earnings before interest, taxes, depreciation and amortization, an implied stock price of about $6.16 to $6.41 were it valued like its peers, as opposed to $3.52 on Feb. 26, MMI says in its letter.
Shares of DHT closed Tuesday at $3.95.
In addition, the hedge fund strongly urges DHT's board to appoint Cowen, a veteran in the oil tanker and dry bulk shipping business and former chief operating officer of DHT's former parent, dry bulk shipping company Overseas Shipholding Group Inc. (OSG).
MMI has asked DHT for comment on its proposals by March 12.
On Monday, DHT Maritime announced it had completed a restructuring that formed its new parent company, DHT Holdings, which is organized in the Marshall Islands. DHT Maritime operates a fleet of double-hull crude oil tankers which operate principally on international routes.