Big 5 Sporting Goods Corporation (BGFV): Activist Stadium Capital Takes Next Step and Nominates 3 Directors

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Alexander Seaver‘s Stadium Capital Management is getting more serious about locking horns with Big 5 Sporting Goods Corporation (NASDAQ:BGFV)‘s management, according to an amended Schedule 13D filing submitted by the fund. Stadium Capital is nominating three independent candidates including, Dominic P. DeMarco, a Managing Director and Co-Chief Investment Officer of SCM and an existing member of the Board; Nicholas Donatiello, Jr., a consumer, media and technology strategist and a recognized corporate governance expert; and Michael J. McConnell, an investor and former chief executive officer of consumer-facing businesses with restructuring expertise, to the Big 5’s Board of Directors at the upcoming Annual Stockholder’s meeting in June this year. With 2.51 million shares, Stadium owns 11.4% of the company’s outstanding shares. The latest development comes against a backdrop of earlier tussles between Stadium and Big 5 that started in December last year.

Alexander Seaver Stadium Capital

Big 5 Sporting Goods Corporation (NASDAQ:BGFV) has been in SCM’s portfolio since as long as 2006, but the recent spat has its roots in the company’s board not responding to the investor’s demands for improving governance by introducing measures such as holding elections for the company’s board members annually rather than every three years, and also to amend by laws in a way that will allow the majority holder of the company’s outstanding stock to elect the board members. Big 5 Sporting Goods Corporation (NASDAQ:BGFV) responded by forming a “super committee”, which had the entire board’s backing except SCM’s representative, Dominic P. DeMarco. With the new nominations, Stadium is aiming to improve the marks, and hence the valuation, that Big 5 gets at least in terms of corporate governance.

Big 5 Sporting Goods Corporation (NASDAQ:BGFV) slid by nearly 17% during the last year. Besides SCM, Mario Gabelli’s GAMCO Investors is another significant investor in the company with 402,500 shares valued at $5.89 million.

Alexander Medina completed his BA in Economics from Harvard and an MBA from Stanford. He founded his relatively small hedge fund, Stadium Capital Management (SCM) in 1997 and the firm now has offices in Bend, Oregon and New Canaan, Connecticut. SCM also engages in margin trading, hedging and other investment strategies and may also engage in short selling. Towards the end of 2014, the value of the firm’s holdings stood at $398.77 million with 47% of the investments in the consumer discretionary sector and another 45% in industrials. Stadium initiated two new positions during the fourth quarter in Columbia Banking System Inc (NASDAQ:COLB) and Ubiquiti Networks Inc (NASDAQ:UBNT).

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