Jeff Smith’s Starboard Value Reduces Stake In LSB Industries Inc. (LXU) to 6.1%

A few law firms have just opened investigation claims of potential misrepresentations by LSB Industries and certain of its officers and directors, focusing on whether the company violated securities laws by delivering misleading information to the public. Last week, LSB posted its financial results for the second quarter of this year, missing the earnings estimate by $0.35. At the same time, the company announced that its board’s Strategic Committee had authored a report after evaluating the company’s business strategy, related party transactions and other corporate governance practices. The Chairman of the Strategic Committee, Lance Benham, asserted the following:

“We believe the actions taken by the Board will significantly improve the Company’s corporate governance structure, enhance the execution of the Company’s strategic growth initiatives and ultimately drive improved shareholder value.”

Moreover, the company posted net sales of $182.7 million for the second quarter of this year, down by 9.4% compared to the same quarter a year ago. Meanwhile, the net income came at $0.02 per diluted share, compared to $0.47 posted a year ago. Some officials at LSB Industries have claimed that the financial results of the company for this quarter were impacted by both internal and external factors, which suggests that the company has not been doing so well lately. The stock of LSB Industries dropped significantly on August 7, affected by earnings miss, but also by the launch of investigations.

Interestingly, Jeffrey Smith’s Starboard Value sold 335,000 shares on August 5 and August 6 prior to the release of earnings. Another shareholder of the company is Jeffrey Gendell’s Tontine Asset Management, which owns 723,053 shares as of the end of March.

Disclosure: None