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 August 17, 2012 SYMBOL COMPANY INVESTOR AGU Agrium Inc. Jana Partners ANEN Anaren Inc. Discovery Capital ATRM Aetrium Inc. Concerned Aetrium Shareholders CBRL Cracker Barrel Biglari Holdings CLW Clearwater Paper Corp SAC Capital Advisors ETJ Eaton Vance Risk-Managed Diversified Equity Income Fund Bulldog Investors HZNP Horizon Pharma, Inc. Discovery Capital MBND MultiBand Corporation Red Oak Partners 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 9

3 Agrium Inc. (AGU) Activist Investor: Jana Partners Shares % Outstanding ~ 7,742,000 ~4.9% Not Avail Catalyst: On August 14 AGU issued a press release announcing it has been in discussions with activist investor Jana Partners regarding Jana s request that the Company be split into separate retail and wholesale businesses. In the press release AGU stated, it will continue to execute its integrated business strategy, which is delivering record results and creating sustainable shareholder value, and that it will not spin off its Retail operations. Share Price B 16.0B Enterprise Value 16.3B Net Cash -890M 2.8B 52 wk. range EV/ 5.8 Later in the day on August 14, Jana Partners issued a press release stating they were disappointed that before [Jana and AGU s] discussions have concluded Agrium would reject any topic out of hand. We also note that Agrium has addressed only its structure and has not truly addressed the cost and operating performance improvement opportunities we have identified, the fixing of which could generate billions in value. While Agrium has pointed to its short-term share price performance in 2012, the long-term value creation picture is much more relevant A copy of Jana s August 14 press release is available here: On August 20 AGU issued a shareholder presentation discussing its communications with Jana since May 31 and highlighting why spinning off the Retail business is not in the best interest of shareholders. A copy of AGU s August 20 shareholder presentation is available here: Anaren Inc. (ANEN) Activist Investor: Discovery Capital Shares % Outstanding 772, % Catalyst: On August 16 Discovery Capital disclosed a 5.6% active ownership stake in ANEN and revealed that on June 27 th ANEN agreed to support (in the Company s proxy materials) Discovery s proposal requiring all directors be elected by a majority of the votes cast. Share Price M 258M Enterprise Value 224M Net Cash 43M 23M 52 wk. range EV/ 9.9 We previously covered ANEN in our February 3, 2012 Catalyst Research Report, highlighting Vintage Capital s increase in active ownership to 11.3% of the total shares outstanding at an average cost of $18.82/share. Aetrium Inc. (ATRM) Activist Investor: Concerned Aetrium Shareholders (CAS) Shares % Outstanding 1,796, % 1.01 Catalyst: On August 14 Jeff Eberwein announced the formation of an investment group called the Concerned Aetrium Shareholders and disclosed their 16.66% active ownership position. In addition, CAS announced that one of the members of their investment group met with ATRM on June 11 to discuss the Company s performance. Share Price M 10M Enterprise Value 6M Net Cash 4M -4M 52 wk. range EV/ Negative CAS plans to continue discussions with ATRM regarding corporate strategy, on-going business operations, potential asset sales, membership of the board of directors, and company management, among other topics. Page 3 of 9

4 Cracker Barrel Old Country Store (CBRL) Activist Investor: Biglari Holdings Shares 4,064,509 Catalyst: % Outstanding 17.5% On August 16 Biglari Holdings (BH) nominated two people for election at CBRL s next annual meeting Share Price B 2.5B Enterprise Value 1.9B Net Cash -462M 238M 52 wk. range EV/ 8.2 We previously covered CBRL in our April 20, April 13, January 27, January 13, January 6, 2012; November 18, September 23, September 2, August 26 and June 17, 2011 Catalyst Research Reports, highlighting BH s active ownership stake and August 23, 2011 letter expressing concern over the Company s failure to disclose operating segments for both the restaurant and the retail operations. On September 1, 2011 BH nominated two individuals to the 11 member board (later reduce to one nominee). On September 23 CBRL adopted a Poison Pill with a 10% trigger that would expire at the Company s shareholder meeting unless approved by shareholders. The Company states that the action was in response to BH s clearance under the Hart-Scott-Rodino Act to acquire up to 49.99% of the Company s common stock. (The approval of the Poison Pill was put to a shareholder vote at the annual meeting and defeated). In a press release issued on the same day, BH stated that the reasoning provided by the board to adopt the pill was misleading since they had told the Company that they were not interested in seeking control of CBRL. On November 14 BH issued a letter to shareholders outlining a business improvement plan for CBRL. On April 13, 2012 we reported that BH had increased its ownership from 9.9% to 16.9% (currently 17.5%) since losing a proxy contest for board representation on December 20, On April 10, 2012 CBRL adopted another poison pill, this time with a 20% trigger. On April 19 Biglari issued a letter to CBRL shareholders reaffirmed its long-term investment commitment in CBRL and calling upon the board to replace the CEO. In addition, Biglari stated that they intend to replace four board members at the next annual meeting. A copy of Biglari s April 19, 2012 letter is available here: Proxy Solicitor to Cracker Barrel Proxy Solicitor to Biglari Holdings Legal counsel to Biglari Holdings Continue to Next Page Page 4 of 9

5 Clearwater Paper Corp. (CLW) Activist Investor: SAC Capital Advisors Shares % Outstanding Share Price 1,640, % Catalyst: On August 17 SAC Capital announced that a representative of SAC proposed to the CLW Board that it: (i) initiate the separation of the Consumer Products business from its Pulp and Paperboard business, to enable the Company to pursue the divestiture of one or both businesses to one or more strategic and/or financial buyers; (ii) engage an investment banking firm to advise on the feasibility and prospective terms of such potential divestitures, including identifying potential buyers; and (iii) nominate and elect two new independent members of the Board (thereby increasing the Board s size from six to eight members). 1.9B 859M Enterprise Value 1.4B Net Cash -512M 209M 52 wk. range EV/ 6.5 We previously covered CLW in our May 4, 2012 Catalyst Research Report, highlighting SAC Capital s letter to CLW expressing concerns over the strategic direction of the business. In the letter SAC announced their belief that the company is deeply undervalued by the public markets despite its high quality assets. A copy of SAC Capital s May 1 letter is available here: Eaton Vance Risk-Managed Diversified Equity Income Fund (ETJ) Activist Investor: Bulldog Investors Shares 5,892,975 Catalyst: % Outstanding 8.08% Bulldog has recently increased their ownership in ETJ from 6.27% to 8.08% of the Company s shares Not Avail outstanding. Share Price Enterprise Value Net Cash 52 wk. range EV/ We previously reported in our Catalyst Research report that on July 19 Bulldog disclosed a 6.27% active investment in ETJ and announced their concern about the Fund s persistent double digit discount to net asset value. As of August 17 ETJ was trading at a % discount to NAV. Horizon Pharma, Inc. (HZNP) Activist Investor: Discovery Capital Shares 2,550,868 Catalyst: % Outstanding 7.5% On August 13 Discovery disclosed a 7.5% active ownership stake in HZNP Share Price M 142M Enterprise Value 139M Net Cash 12M -69M 52 wk. range EV/ Negative Page 5 of 9

6 MultiBand Corporation (MBND) Activist Investor: Red Oak Capital Shares 1,674,029 Catalyst: % Outstanding 6.71% On August 10 MBND entered into a settlement agreement with Red Oak. Under the terms of the agreement 2.34 MBND agreed to add one individual recommended by Red Oak to the Board. Share Price M 40M Enterprise Value 76M Net Cash -33M 17M 52 wk. range EV/ 4.5 We previously covered MBND in our August 10, 2012 and August Catalyst Research Reports, highlighting that on June 9, 2011 MBND sent Unitek a letter saying, Multiband's board of directors has considered your offer and we do not believe it is in the best interests of our shareholders. We will not have further dialogue about this matter. On August 3, 2011 Austin Marxe & David Greenhouse (7.2% shareholder) sent a letter to MBND supporting Unitek s proposal to acquire the Company for $4.50/share, payable in the form of cash and stock, and encouraged the Company to engage with Unitek to discuss the proposal. On August 10, 2012 we reported that Red Oak disclosed a 6.71% active ownership stake and stated they have had discussions with the company about ways to improve board governance, insider alignment, and board composition. Red Oak also disclosed that on May 18 they nominated three individuals to the board for election at the next annual meeting. Page 6 of 9

7 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 7 of 9

8 PLATINUM SPONSORS Legal Advisers Olshan Grundman Frome Rosenzweig & 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. 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 450 lawyers in offices in New York, Washington, D.C., and London, has a long history of serving private equity and hedge fund clients. Marc Weingarten, Partner marc.weingarten@srz.com Tel: Page 8 of 9

9 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. Peter Casey, Executive Vice President pcasey@allianceadvisorsllc.com Tel: Georgeson Inc. is the world s leading provider of strategic proxy and corporate governance advisory services to corporations and shareholder groups working to influence corporate strategy. For over half a century, Georgeson has specialized in complex solicitations such as hostile and friendly acquisitions, proxy contests and takeover defenses. For eight consecutive years, Georgeson has been ranked the No. 1 proxy solicitor for M&A transactions in the US. Georgeson s experts include former corporate secretaries who have worked toward successful outcomes with activist investors, former directors of US research at RiskMetrics, M&A attorneys, and the most experienced proxy solicitation team in the industry. Rachel Posner, Senior Managing Director and General Counsel rposner@georgeson.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. 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. Mark Harnett, President mharnett@mackenziepartners.com Tel: Page 9 of 9