In the letter, Colen expressed his dissatisfaction with certain board and management policies that he finds detrimental to shareholder value. The investor is concerned about the lack of an investor communication program, weak corporate governance and overcapitalized balance sheet.
Colen states that the three factors have had a deleterious impact on shareholder returns over a multi-year period. Also, he states that the board of directors of MicroStrategy (NASDAQ:MSTR) is responsible to pursue business and governance objectives that are in the best interest of all stakeholders.
“In our view, the board has acted in a way that fails to meet a reasonable standard of fiduciary behavior,” he writes in the letter.
Further, Colen states that MicroStrategy (NASDAQ:MSTR) closed all traditional communications with the investment community almost nine years ago. He believes that the lack of an investor communication program makes the majority of institutional investors who take their fiduciary responsibilities seriously reluctant to consider an investment in a company that refuses to communicate with its shareholders.
Colen recommends the company’s board of directors to re-institute a quarterly conference call and hire a dedicated Investor Relations professional to open a line of communication with investors, prospective investors, and sell-side analysts.
Additionally, the investor suggests the company to separate the chairman and CEO roles. Michael Saylor could work as a chairman and the board could hire or promote a fully-engaged CEO with leadership and operational experience in the software industry.
In addition, Colen wants the current board vacancies to be filled with independent directors having public company experience and strong software industry backgrounds.
Furthermore, the investor recommends the board to take advantage of the severely depressed stock price by aggressively utilizing all of the company’s $455 million share repurchase authorization.
Apex Capital and its affiliates own 467,100 shares of MicroStrategy (NASDAQ:MSTR), representing 5.15% of the company’s class A shares outstanding. The fund has maintained an investment position in MicroStrategy (NASDAQ:MSTR) for nearly two years.