Clinton Group Inches Down Stake in NutriSystem Inc. (NTRI); Advises Company To Buy Back Stock

In its latest filing with the Securities and Exchange Commission, Greg Taxin’s Clinton Group has disclosed a letter sent to NutriSystem Inc. (NASDAQ:NTRI)’s Chief Executive Officer, Dawn Zier. According to the filing, the fund owns an aggregate of 1.70 million shares, representing about 5.9% of the company’s outstanding common stock. The position represents a decrease from 1.84 million shares the fund disclosed in February 2014.

NutriSystem Inc. (NASDAQ:NTRI)

In the letter, Clinton Group urged NutriSystem Inc. (NASDAQ:NTRI) to buy back $80 million worth of its own stock at prices up to $18 per share or consider an acquisition of the company by a private equity firm. NutriSystem Inc. (NASDAQ:NTRI) provides a weight management system. The investor has praised the company for a number of positive developments and expressed his continued enthusiasm for the company’s value and future.

According to the investor, the company could use the same cash it distributes annually as a dividend on each share to finance debt to purchase that same share. It states that such a buyback would not limit the company’s ability to execute its business plan or capital spending program because each share carries a $0.70 dividend, which would no longer be paid if the share were bought back.

“An $80 million buyback executed at prices up to $18 per share (as much as a 20% premium to today’s close) would allow the company to purchase 4.5 to 5.0 million shares of its own stock (equivalent to roughly eight days of trading volume). The company’s outstanding share count would decline by approximately 17%,” the investor states in the letter.

“If the company waits to buy stock until after the First Quarter 2014 financial performance is made public, we believe the opportunity to buy stock at these prices will be gone. For the time being, it seems, the stock has suffered at the hands of investors who have lumped NutriSystem in with the other commercial weight loss companies in spite of  NutriSystem’s significant fundamental outperformance,” according to the letter.

Further, Clinton Group states there are innumerable private equity firms that would be happy to consider a leveraged buyout of NutriSystem Inc. (NASDAQ:NTRI), leaving the management team, strategy and employees in place.

The full text of the letter can be read below:

Clinton Group’s Letter to NutriSystem

Another significant shareholder of NutriSystem is Renaissance Technologies, led by Jim Simons, which, in its latest 13F, revealed holding around 2.0 million shares of the company.

Services sector represents the largest share of Clinton Group’s equity portfolio. The fund holds significant long positions of 2.54 million shares worth $17.76 million in ValueVision Media Inc (NASDAQ:VVTV) and 1.22 million shares worth $15.07 million in Stillwater Mining Company (NYSE:SWC).

Recently, Clinton Group disclosed reducing its position in The Wet Seal Inc. (NASDAQ:WTSL) to 6.4 million class A shares from around 6.6 million held earlier.

Disclosure: none

Recommended reading:

Hedge Fund Cliffhanger at Cliffs Natural Resources Inc (CLF)

Why ‘Hedgies’ Are Bullish on Cracker Barrel Old Country Store, Inc. (CBRL)

John H Lewis, Osmium Partners Appoint Director To Vitacost.com, Inc. (VITC)’s Board

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!