Cove Street Capital, LLC Calls On Westell Technologies, Inc Board of Directors to Hire Investment Banker, Sell Company
EL SEGUNDO, Calif., Aug. 11, 2016 /PRNewswire/ -- In a letter to the Board of Directors of Westell Technologies, Inc (Nasdaq: WSTL) ("Westell" or the "Company"), and in an updated 13D filling with the SEC, Cove Street Capital, LLC ("Cove Street") called upon the Board of Directors of Westell and in particular, its controlling shareholder, Robert C. Penny, III, to end nearly two decades of shareholder value destruction by hiring a reputable investment banker and selling the Company.
Two Decades of Total Returns as of August 8, 2016 |
|||||
1-YR |
5-YR |
10-YR |
15-YR |
20-YR |
|
Westell |
-40.9% |
-73.4% |
-70.8% |
-52.4% |
-98.0% |
Russell 2000 |
0.6% |
76.8% |
81.2% |
157.6% |
276.6% |
S&P 500 |
3.6% |
86.0% |
72.2% |
83.1% |
229.4% |
"It is not a giant mental stretch to conclude that owning the shares of Westell has been a dismal investment over almost any time period during the past 20 years," states Cove Street Principal and Portfolio Manager, Jeffrey Bronchick, CFA. "What is prompting our rare and frankly undesired public stance is the obvious disinterest of the Board and in particular, Robert Penny, III—who leads the Trust that controls the majority voting shares in Westell—to show any ability or desire to improve shareholder value."
Cove Street presently owns 16.3% of the common stock class A shares outstanding, making it the second largest shareholder after the Penny Family Trust. Cove Street's research suggests Westell's complete inability to create shareholder value is largely due to its small size and specifically that it sells to very large customers in a telecommunication industry that requires significant scale. It simply does not possess the scale to profitably develop new products or to run an operations infrastructure that can effectively sell into what is an increasingly global industry.
Cove Street Principal Eugene Robin, CFA adds that, "It is time for the Board and the Penny family to wake up and take an interest in the damage it has inflicted on shareholders ... and frankly its own economic position. Westell has no business being a standalone public company and every day that goes by, the Company burns cash and eats shareholder value. We urge the Board and the Penny family to take immediate action."
Read Cove Street Capital's Letter to the Board of Westell Technologies at www.CoveStreetCapital.com/blog.
Important Information:
Cove Street Capital, LLC, a Delaware Limited Liability Company, is a California based, SEC registered investment advisor that commenced operations in 2011.
SOURCE Cove Street Capital, LLC
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