Should You Go Long PICO Holdings Inc (PICO) As An Activist Gets More Serious?

At the end of the letter, the investor urged for a reshuffle of the board of directors and the addition of three new members, namely Anthony Bergamo, James Henderson, and Daniel Silvers.

“Importantly, there is still time to put PICO on the path toward significant shareholder value creation. We believe PICO’s stock price could double or even triple from its current level if our recommended courses of action are enacted expediently,” the letter concluded.

The full text of the letter is available below:

Central Square Management Letter to PICO Holdings

However, despite the bullish target, Central Square has inched down its stake from 1.37 million shares, equal to 6% of the outstanding stock, disclosed in an earlier filing, where the investor also issued a letter sent to the board (see details).

The market positively received the letter as the stock appreciated by 4% on Tuesday. However, year-to-date the stock is down by over 43%, significantly lagging compared to the average return of its peers among conglomerates. Among the funds from our database, PICO Holdings Inc (NASDAQ:PICO) is not very popular as only ten investors reported holding long positions as of the end of June, however they did amass over 16% of the company’s shares. Chuck Royce’s Royce & Associates held the largest stake, containing 1.94 million shares, followed by Central Square, while other investors reported less significant positions, such as 287,000 shares held by Gregory Bylinsky and Jefferson Gramm’s Bandera Partners, which stands on the third spot.

With this in mind, until PICO Holdings Inc (NASDAQ:PICO) shows some effort towards implementing the changes proposed by Central Square, it’s better to stay away from the stock, although looking at the weak performance of the stock in the past years, it is most probable that other investors will support the activist and urge the board and management to undertake these steps.

Disclosure: None