CATALYST EQUITY RESEARCH REPORT Weekly Research Highlighting Activist Investments

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1 Weekly Research Highlighting Activist Investments Subscribe to receive this FREE Report ed weekly.

2 HIGHLIGHTING ACTIVIST INVESTMENTS Week Ending February 7, 2014 SYMBOL COMPANY INVESTOR AAN Aaron s Inc. Vintage Capital AMED Amedisys, Inc. KKR Asset Management BBRG Bravo Brio Restaurant Discovery Capital CARB Carbonite, Inc. Discovery Capital CNMD CONMED Corporation Coppersmith Capital CWH CommonWealth REIT Corvex/Related HELE Helen of Troy Sachem Head IMF Western Asset Inflation Bulldog Investors MGT MGT Capital Investments Iroquois Capital MSTR MicroStrategy Inc. Apex Capital PTRY The Pantry, Inc. JCP Investment/Lone Star RLD RealD Inc. Altai Capital SVVC Firsthand Technology Value Bulldog Investors USAK USA Truck Knight Transportation VVTV ValueVision Media Clinton Group/Cannell Capital HEDGE FUND SOLUTIONS (HFS) provides investment research, strategy and stakeholder communications consulting to companies and investors interested in, or involved with, shareholder activist campaigns. Since 2001 HFS has become the trusted advisor to numerous institutional investors, CEOs and board members worldwide. HFS also administers The Official Activist Investing Blog, the definitive source for activist shareholder information. Catalyst Investment Research is a portfolio of activist investing research products that combine company-specific shareholder activism research with deep value investment analysis and access to industry insiders. HEDGE FUND SOLUTIONS PORTFOLIO OF ACTIVIST INVESTING RESEARCH INCLUDES: Daily Alerts Weekly Summary of Activist Investments Quarterly Buying Analysis of Top 50 Activist Investors Company-Specific Shareholder Activism Analysis (combining shareholder activism & deep value company analysis) Special Reports on Activist Investing 400+ Page Shareholder Activism Report & Regularly Updated Shareholder Activism Resource Portal To Learn More: Download a brochure Page 2 of 13

3 Aaron s Inc. (AAN) Activist Investor: Vintage Capital Shares 7,277,000 Catalyst: % Outstanding 9.5% On February 7 Vintage Capital offered to acquire the Company for $30.50/share in cash A copy of Vintage s offer letter is available here: Share Price B 2.2B Enterprise Value 2.0B 231M 249M 52 wk. range EV/ 8.1 Amedisys Inc. (AMED) Activist Investor: KKR Asset Management Shares 4,836,608 Catalyst: % Outstanding 14.9% KKR disclosed that it has requested 1 representative to be nominated immediately to the AMED Board Share Price B 491M Enterprise Value 493M -27M 53M 52 wk. range EV/ 9.3 Bravo Brio Restaurant Group (BBRG) Activist Investor: Discovery Capital Shares % Outstanding 1,423, % Catalyst: Discovery increased its "active" ownership stake in BBRG from 6.3% to 7.3% Share Price M We initially covered BBRG on May 20, 2013 when Red Mountain disclosed a 5.8% "active" ownership stake and said it was having a dialogue with management about operations, strategic direction, capital structure and corporate governance. Enterprise Value 285M 291M On August 5 Red Mountain disclosed it had increased its "active" ownership from 5.8% to 7.5%. -14M 45M On September 9 Red Mountain disclosed it had increased its "active" ownership in BBRG from 7.5% to 8.5%. 52 wk. range EV/ On November 11 Red Mountain disclosed it had increased its "active" ownership in BBRG from 8.5% to 9.5% On December 5 Discovery disclosed a 5.2% "active" stake in BBRG On January 17, 2014 Discovery increased its "active" ownership stake from 5.2% to 6.3% Page 3 of 13

4 Carbonite, Inc. (CARB) Activist Investor: Discovery Capital Shares 1,560,472 Catalyst: % Outstanding 5.9% Discovery disclosed a 5.9% active stake in CARB Share Price M 268M Enterprise Value 189M 65M 4M 52 wk. range EV/ 47.4 CONMED Corporation (CNMD) Activist Investor: Coppersmith Capital Shares % Outstanding 1,630, % Catalyst: On February 6 Coppersmith Capital disclosed a 5.9% "active" stake in CNMD. Share Price We initially covered CNMD on November 4 when Voce Capital sent a letter to CNMD discussing its concerns relating to governance (Corasanti family influence, compensation and related-party deals -- despite little ownership), poor acquisition management, weak operational management, and other matters. 756M 1.2B Enterprise Value 1.4B -175M 126M 52 wk. range EV/ 10.8 A copy of Voce Capital s press release and letter is available here: On December 16 Camber Capital disclosed a 5.02% active stake in CNMD Legal counsel to Coppersmith Capital Legal counsel to Voce Capital Continue to Next Page Page 4 of 13

5 CommonWealth REIT (CWH) Activist Investor: Corvex/Related Shares See Info Catalyst: % Outstanding See Info On February 5 Corvex/Related issued a presentation titled, "A Case Study in 'Worst in Class' Corporate See Info Governance: The Portnoys Red Tape Bylaws" Share Price B 3.0B Enterprise Value 5.9B -3.0B 546M 52 wk. range EV/ 10.8 A copy of the Presentation is available here: We previously covered CWH in several Catalyst Research Reports, initially highlighting Corvex and Related s February 27, 2013 press release that included an open letter to the CWH Board of Trustees reiterating its demand that they immediately cease its proposed equity offering and debt repurchase. Corvex and Related specified that, as a result of additional and credible analysis, they would be prepared to increase their initial offer to acquire all the outstanding shares of the Company to a price of $27 per share, with the opportunity to meaningfully increase this proposed offer after completing due diligence. On March 1 Corvex/Related filed a lawsuit claiming the share issuance was to dilute the voting power of existing shareholders so that it becomes dramatically more difficult and onerous, if not impossible, for existing shareholders to remove CWH s Trustees. On March 12 the dissidents filed their preliminary consent solicitation statement with the SEC. On March 13 Perry Corp. disclosed a 5.5% active stake and expressed its support for Corvex/Related. On March 14 Corvex/Related amended their complaint in MD State Court seeking to nullify various bylaw amendments that restrict shareholders ability to act by written consent. On March 28 CWH confirmed that it received an indication of interest from Corvex/Related for 100% of shares outstanding for $24.50/sh. On April 15 CWH rejected Corvex/Related s $24.40 buyout offer and announced plans to classify its board structure so that all directors cannot be removed through a consent solicitation. On the same day Corvex/Related demanded the company declare a record date to remove 5 Trustees. On April 30 Perry Corp (5.49% shareholder at $22.17/share cost basis) sent a letter to the board describing the reasons why they intend to support Corvex/Related. On May 1 Luxor Capital (4.7% shareholder at $14.81/share cost basis) stated its support for Corvex/Related On June 21 Corvex/Related issued a press release saying 70% of shareholders supported the board s removal in their consent solicitation. CWH says the consent solicitation did not comply with the requirements set forth in the Company s bylaws and therefore has no legal effect. An arbitration hearing was scheduled for July 18. On November 18 Corvex issued a press release applauding the arbitration ruling that CWH's Bylaws erect a complex wall of procedural hurdles to any consent solicitation; Corvex formally began a consent solicitation to replace CWH directors. On December 16 Corvex/related issued a presentation titled, A Case for Change at CWH On January 16 Corvex/Related announced its slate of nominees. Corvex also rejected CWH s offer of one board seat to Keith Meister from Corvex. On January 29 Corvex/Related released a presentation to replace the CWH board and announced its belief that the REIT s NAV would be closer to $35/share in the near-term and closer to $40/share by the end of 2015 under the new leadership. Legal counsel to Perry Corp Proxy Solicitor to CWH Page 5 of 13

6 Helen of Troy (HELE) Activist Investor: Sachem Head Capital Management Shares ~1,185,000 Catalyst: % Outstanding 3.7% On February 4 Sachem Head sent a letter to the board of HELE highlighting several reasons why the company is undervalued, including the fact that several buyers are interested in acquiring the company. Share Price B 2.0B Enterprise Value 2.1B -189M 186M 52 wk. range EV/ 11.3 (Editor s Note: Potential acquirers are rumored to include Clorox and Kimberly-Clark). A copy of Sachem Head s press release is available here: On February 10 HELE announced plans to repurchase $550M of its shares Western Asset Inflation Management (IMF) Activist Investor: Bulldog Investors Shares % Outstanding 1,021, % Catalyst: Bulldog increased its "active" stake from 10.83% to 14.47% On November 22 Bulldog disclosed an 8.41% "active" stake in IMF Share Price Enterprise Value 52 wk. range EV/ On November 26 Bulldog increased its "active" stake from 8.41% to 10.83% IMF is currently trading at a -2.1% discount to NAV MGT Capital Investments (MGT) Activist Investor: Iroquois Capital Shares % Outstanding Share Price 900, % Catalyst: Iroquois sent a letter to MGT (i) expressing serious concerns with the Board's recent, reactive and shareholderunfriendly entrenchment actions, (ii) stating that the market currently reflects the lack of confidence in management's ability to unlock value, (iii) highlighting the substantial dilution and loss of value shareholders have suffered during the past three years, (iv) announcing its belief that change is required to ensure appropriate actions are taken to improve execution, drive better financial performance, reconstitute the Board and create value for all shareholders. 0.3M 14M Enterprise Value 9M 5M -9M 52 wk. range EV/ Negative A copy of Iroquois letter is available here: We initially covered MGT in November 2010 when activist investor Robert Ladd joined the Company as CEO and board member. On December 16, 2013 Iroquois disclosed a 9.9% "active" stake in MGT Legal counsel to Iroquois Capital Page 6 of 13

7 MicroStrategy Inc. (MSTR) Activist Investor: Apex Capital Shares 467,100 Catalyst: % Outstanding 5.15% Apex sent a letter recommending AMED (i) reinstitute a quarterly conference call and hire an IR professional, (ii) communicate a roadmap for long-term strategy and financial objectives, (iii) separate Chair and CEO, (iv) fill current board vacancies with independent directors having strong software backgrounds, and (v) aggressively utilize all of the Company s $455 million share buyback. Share Price M 1.4B Enterprise Value 1.0B 357M 46M 52 wk. range EV/ 22.8 The Pantry, Inc. (PTRY) Activist Investor: JCP Investment/ Lone Star Value Shares % Outstanding ~450, % Catalyst: JCP/Lonestar filed its preliminary proxy statement highlighting several ways to improve value over the next 5 to 10 years, including: monetize the real estate (possible REIT), reduce capital spending and debt, reduce 100M G&A expense, consider dividend/buyback. Share Price B 325M Enterprise Value 1.3B -909M 199M 52 wk. range EV/ 6.2 A copy of the activists preliminary proxy statement is available here: A copy of PTRY s preliminary proxy statement is available here: We initially covered PTRY on January 23, 2014 when JCP and Lone Star formed a group called the "Concerned Pantry Shareholders" and announced plans to replace 3 board members at PTRY s next annual meeting on March 13, A copy of the activist s press release is available here: Proxy Solicitor to The Pantry Legal counsel to JCP Investment/Lone Star Value Page 7 of 13

8 RealD, Inc. (RLD) Activist Investor: Altai Capital Shares 4,830,000 Catalyst: % Outstanding 9.8% On February 7 Altai changed its filing status from "passive" investor to "active", disclosed a 9.8% ownership 7.52 stake, and said it was having discussions with management. Share Price M 512M Enterprise Value 540M -20M 45M 52 wk. range EV/ 11.9 Firsthand Technology Value Fund (SVVC) Activist Investor: Bulldog Investors Shares % Outstanding 1,175, % Catalyst: Bulldog increased its active ownership from 11.66% to 12.96% We initially covered SVVC on October 24, 2012 highlighting Bulldog s announcement that SVVC shares trade at a large discount to NAV and proposed the Company repurchase its shares or conduct a self-tender offer. Share Price N/A 148M Enterprise Value -12M 160M N/A 52 wk. range EV/ N/A On April 10, 2013 Bulldog sent a letter to SVVC shareholders (i) criticizing the Fund s discount to NAV, (ii) detailing plans to elect new directors, and (iii) replacing the investment advisor. A copy of Bulldog s April 10 letter is available here: Bulldog increased its active ownership from 9.67% to 9.8%. On November 22 Bulldog nominated 2 for election to the board and submitted a proposal to repurchase shares when they are trading at a discount to NAV. On December 30 Bulldog responded to SVVC s no-action request to the SEC seeking to exclude Bulldog's proposal from its proxy statement. In its letter, Bulldog quoted Macbeth, stating that the request is a "tale told by an idiot, full of sound and fury, signifying nothing." On January 10, 2014 Bulldog sent a letter to SVVC requesting answers to several questions before the shareholder vote to elect directors. A copy of Bulldog s letter is available here: On January 17 Bulldog filed a preliminary proxy statement to elect 2 directors, submitted a binding proposal to terminate the investment management agreement between SVVC and Firsthand Capital Management, and submitted a non-binding proposal that the board should consider authorizing a program to repurchase shares when they are trading at a discount from net asset value ("NAV"). The annual meeting is scheduled for May 23, 2014 Page 8 of 13

9 USA Truck (USAK) Activist Investor: Knight Transportation Shares 1,304,517 Catalyst: % Outstanding 12.4% USAK and Knight Transportation entered into a settlement agreement to end litigation. Under the terms of the agreement Knight agreed not to acquire any additional shares and will not vote its shares at the annual meeting. Share Price M 151M Enterprise Value 295M -142M 35M 52 wk. range EV/ 8.4 We initially covered USAK on September 26 when Knight Transportation s offer to acquire USAK for $9 per share was rejected by the board. On September 30 Knight increased its stake from 7.9% to 11.3% and issued a press release commenting on USAK's rejection of its $9/share buyout offer. A copy of Knight s press release is available here: On November 7 Baker Street disclosed a 13.3% "active" ownership stake in USAK at an avg. cost of $12.93/sh. On January 28 Stone House Capital changed its filing status from "passive" and disclosed a 14.7% "active" position at $12.63/share. (Note: Bill Ackman from Pershing Square is Stone House's largest investor). Legal counsel to Baker Street Continue to Next Page Page 9 of 13

10 ValueVision Media Inc. (VVTV) Activist Investor: Clinton Group Shares 4,479,300 Catalyst: % Outstanding 9.0% Clinton issued a press release criticizing the board for failing to hold a special meeting by February 2 and indicated it will pursue its proposals at the Company's annual meeting in June. Share Price M 285M Enterprise Value 297M -9M 14M 52 wk. range EV/ A copy of Clinton s press release is available here: We initially covered VVTV in our October 3, 2008 Catalyst Research Report, highlighting Cannell Capital s change in filing status with the SEC from passive investor to active investor. In addition, we highlighted Cannell had sent a letter to VVTV informing them of its intention to nominate directors for election to the board at the 2009 annual meeting. On October 27, 2008 Cannell (currently a 4.2% shareholder) sent a letter to VVTV suggesting they declare a $1.20 special dividend. Cannell also informed VVTV of his intention to evaluate his options for calling a special meeting of the Company's shareholders to vote upon whether (a) the Company's cash should be returned to its shareholders or (b) the existing board of directors should continue as directors of the Company in the event the Company disagrees with his suggestion to declare a special dividend. On October 20, 2013 Clinton disclosed a 5.8% "active" stake in VVTV and sent a letter to the board criticizing its asset management and called for the CEO's removal. A copy of Clinton s October 30 letter is available here: Clinton formed an investment group with Cannell Capital (total 11% ownership) to call a special meeting in late January to expand the board to 9 members and elect 7 new directors. On November 4 the Clinton issued a press release announcing its nominees. On November 15 Clinton sent a letter to VVTV commenting on the Company's refusal to set a special meeting due to minor technicalities in Clinton's Demand (e.g. Clinton omitted a digit on a zip code). A copy of Clinton s letter is available here: Legal counsel to Clinton Group Page 10 of 13

11 CONTACT INFORMATION: Hedge Fund Solutions, LLC Damien J. Park Tel FREE Subscription to the weekly report: or The Catalyst Equity Research Report is a general circulation weekly. Hedge Fund Solutions and/or its affiliates (the Firm ) may have a consulting relationship with the companies featured in this report (the Companies ). The Firm may also actively trade in the securities of the Companies for its own account. At any time, the Firm, funds it manages and/or its employees or their family members may have a long or short position in registered or non-registered securities or in options on any such security of any company mentioned in this report. The information contained in this report is not a complete analysis of every material fact with respect to the company, industry, or security and is not an offer or solicitation to buy or sell any security. Although opinions and estimates expressed in this report reflect the current judgment of the Firm, the information upon which such opinions and estimates are based is not necessarily updated on a regular basis. In addition, opinions are subject to change without notice. The Firm from time to time may perform consulting services for companies mentioned in this report and may occasionally possess material, nonpublic information regarding such companies. This information is not used in the preparation of this report. Facts and other information contained in this report have been obtained from the public sources considered reliable but are not guaranteed in any way. Hedge Fund Solutions Portfolio of Activist Investing Products Catalyst Investment Research Daily: Alerts Weekly: Catalyst Equity Research Report Quarterly Buying Analysis Top 50 Activist Investors Specific Activist Target Catalyst Investment Research Special Reports Shareholder Activism Report & Resource Portal Download a Brochure Page 11 of 13

12 PLATINUM SPONSORS Broker-Dealer APB Financial Group is a Special Situations Brokerage Firm tailored to investors seeking fundamental value and catalyst-driven activist investments. Contact: Steven Abernathy, Principal sabernathy@abbygroup.com Tel: PLATINUM SPONSORS Legal Advisers Olshan Frome Wolosky LLP is a law firm dedicated to providing personal service tailored to the specific requirements and concerns of the firm s clients. Olshan is widely recognized as a preeminent law firm in the activist strategy area, and represents experienced activist investors, funds new to the activist area, as well as other investment and hedge funds. Olshan has extensive experience advising clients in a wide range of activist strategies, from private negotiations with management to public, high profile proxy contests, including expertly and efficiently handling litigation relating to activist matters. We also specialize in mergers and acquisitions and hostile takeovers, with extensive expertise in these matters. Olshan s highly regarded attorneys provide a full range of legal services and are uniquely positioned to provide expert advice regarding the complicated and nuanced legal issues facing activist investors today. Contact: Steve Wolosky, Partner swolosky@olshanlaw.com Tel: Schulte Roth and Zabel LLP, one of the leading law firms in the activist investing area, has been involved in some of the highest-profile campaigns facing the business world in recent years. Serving both activist-only and occasional activists, the firm advises on federal securities law, state corporate law, Hart-Scott-Rodino, proxy rules and related matters, as well as handling investigations and litigations arising out of clients' activist activity. The firm, with over 375 lawyers in offices in New York, Washington, D.C., and London, has a long history of serving private equity and hedge fund clients. Contact: Marc Weingarten, Partner marc.weingarten@srz.com Tel: David Rosewater, Partner david.rosewater@srz.com Tel: Page 12 of 13

13 PLATINUM SPONSORS Proxy Advisors Alliance Advisors LLC is a multi-faceted shareholder communications firm specializing in proxy solicitation, corporate governance consulting, and information agent services. Our in-depth view of the investor communities and governance environment allows us to prepare for successful outcomes. Alliance Advisors fight team has built a distinguished reputation by successfully completing countless contested assignments. The team will complete a comprehensive analysis of the shareholder base and build a calculated battle plan accordingly. We will assist in the crafting and delivery of your message to the target audience, ensuring the message is heard and understood. Alliance Advisors consistently delivers successful outcomes to our clients. Contact: Peter Casey, Executive Vice President pcasey@allianceadvisorsllc.com Tel: Innisfree M&A Incorporated is a full service proxy solicitation/investor relations firm providing clients with sound tactical and strategic advice and results-oriented implementation in proxy and consent solicitations (whether friendly or contested), tender and exchange offers, mergers, rights offerings, strategic restructurings and other domestic and cross-border transactions requiring action by public security-holders. We provide expert consulting services on a wide range of matters, including executive compensation proposals, corporate governance issues and investor relations. Innisfree s reputation derives from our success in complex and/or contested situations. Key to that success is our ability to track, identify and understand the shifting dynamics of a company s security-holder base and provide battle-tested advice based on that information. We are convinced, and our unrivaled record demonstrates, that this refined, analytical based approach enables us to deliver the extraordinary results our clients expect. Contact: Arthur Crozier, Co-Chairman acrozier@innisfreema.com Tel: MacKenzie Partners, Inc. is a full-service proxy solicitation, investor relations and corporate governance consulting firm specializing in mergers-and-acquisitions related transactions. The firm has offices in New York City, Los Angeles, Palo Alto and London. MacKenzie's services include corporate governance consulting, security holder solicitations, information agent services for tender and exchange offers, beneficial ownership identification, market surveillance and associated financial, investor and media relations services. We work in close partnership with our client's attorneys, investment bankers and other consultants, providing advice and counsel at each stage of the transaction. Contact: Mark Harnett, President mharnett@mackenziepartners.com Tel: Page 13 of 13