Monday, October 15, 2012

Solitron Followup: Even small investors have a voice!

In June I wrote a letter to the Board of Directors of Solitron Devices (SODI) urging them to buyback shares, and to hold an annual meeting.  Since my post I've received a number of emails asking if I'd received a response from the company.  I had received a short letter, but it wasn't worth a post, it was a very simple acknowledgment that the company received what I sent, and they'd consider my proposals.

In my initial letter I proposed two things: first to show that the company is committed to returning cash to shareholders, and secondly to open a formal channel of communication between management and shareholders.

I'm excited to announce that the company responded to both proposals in their latest 10-Q filed tonight. In the latest quarter, Solitron bought back 99,943 shares of stock in a privately negotiated sale at $2.75 a share.  It's easy to be greedy and wish they would have bought back more, I'm happy to see any movement in a shareholder friendly direction.  The buyback was sizable in that it equals roughly 5% of the total shares, and about 10% of the float.

The second announcement was buried at the bottom of the notes, the 10-Q states:

"On October 15, 2012, the Board of Directors of the Company approved a resolution to hold annual meetings of the Company's shareholders approximately six weeks following the filing of the Company's Annual Report on Form 10-K each year."

The company usually files their 10-K around May, meaning the annual meeting will take place sometime in July.  I'm looking forward to meeting up with other shareholders at the first annual meeting in Palm Beach.

What this action signals to me is that the CEO of Solitron can hear us as shareholders, and when our cries finally became loud enough he acted.  We made reasonable demands, and they were met with a reasonable response.

There were a few other things I noticed in the filing that were welcome signs.  The first is that Solitron mentioned their largest clients, and their largest suppliers.  They also cleaned up a lot of the language making it easier to read, and introducing more transparency.

While I'd love to take credit for these results, I can only take credit for getting the ball rolling.  After I posted about taking action, and posted my letter, I heard from a number of shareholders.  I know that many readers contacted the company and urged them to consider my proposals.  I think the chorus of shareholders was loud enough that Solitron realized they couldn't continue to ignore us any longer.  I'd especially like to thank Tony (who's letter to TSRI was posted recently) for sending a letter to Solitron recently that I think finally pushed them to act.  A big thank you also goes out to Ragnar is a Pirate and Valueprax for their efforts to contact shareholders and raise support as well.

The lesson to me in this whole episode is that things have changed with the shareholder management relationship.  In the past shareholders were nebulous, with few ways to contact each other, and even less interest in doing so.  Larger shareholders like institutions would get special treatment by virtue of their size.  Small shareholders were ignored, and didn't have a voice.  The Internet has changed all of this.  I will post about a company and the next day I'll have a few emails from shareholders.  With an effort like the one for Solitron word spread amongst blogs and shareholders and we were able to become a unified voice for action.  I don't know if a term exists for this, so I'll invent one, we're entering the age of socialized-shareholding.  With blogs, Twitter, and Facebook it's easier than ever to connect with people who share an interest and share common goals.

I don't believe the journey with Solitron is done, we're just beginning, but progress is being made, I'm excited and hopeful that as shareholders we can have our voice heard a little louder, and a little clearer.

Talk to Nate

Disclosure: Long Solitron

7 comments:

  1. Hear, hear to socialized-shareholding!

    ReplyDelete
  2. Congratulations Nate.

    No need to be so modest I am sure your efforts had a lot to do with the change.

    But as you say this is just the start...

    ReplyDelete
  3. Nicely done. I think you're spot on also with regards to socialized-shareholders. Having not been trading for too long, I've found the amount of useful info disseminated via Twitter and blogs to be invaluable in helping me learn.

    It is good to see how the same system can also be an agent for change too and I'm sure were entering a new era for shareholder involvement.

    ReplyDelete
  4. Socialized capitalists?! ;-)

    Interestingly, I think I've written 3 or 4 long letters in my head recently to senior management of various companies - perhaps it might be time to put pen to paper, and actually send them off!

    Well done, all.

    ReplyDelete
  5. Congrats! Very interesting turn of events for shareholders. Probably overdue, but going to take a look at SODI. Thanks for the idea.

    ReplyDelete
  6. Very well done, Nate.......... I, too, am a shareholder and have followed your lead into this small activist role. Thanks for your persistence.

    cs

    ReplyDelete