Holly Energy Partners L.P. (HEP) and Two Companies Facing Activist Pressure Witness Insider Buying

Violin Memory Inc. (NYSE:VMEM) registered a massive volume of insider buying in March. To begin with, Director Donald J. Listwin purchased 100,000 shares on Thursday at $0.52 apiece, all of which are held by the Don Listwin Trust that currently owns nearly 2.34 million shares. Mr. Listwin purchased an additional 286,000 shares in mid-March. More importantly, Chief Executive Officer and President Kevin DeNuccio snapped up 75,000 shares last Monday at a weighted average price of $0.50, which lifted his ownership to 348,054 shares.

Violin Memory is a developer and supplier of memory-based storage systems designed to line up storage performance with high-speed applications, serves and networks. Violin Memory’s shares have been on a freefall since the company went public in the fall of 2013, which might have forced the company to pursue strategic alternatives to create shareholder value. The company has been facing activist pressure from firms such as Clinton Group and Imation, which recently provided a notice of their intention to nominate three individuals to the company’s Board of Directors at the upcoming annual meeting of shareholders. The Clinton Group and Imation said earlier this year that Violin Memory should be sold to a strategic buyer before the upcoming shareholder meeting. The two shareholders “believe that the Company’s technology is exceptional and essential to a number of potential large strategic buyers who intend on competing in flash-based storage”. “Looking at valuation multiples of acquired companies in the flash storage space – SolidFire, Whiptail and Virident; and trading multiples of public comparable companies (Nimble Storage and Pure Storage)– multi-party demand in an auction process can yield a significant premium to Company’s stock price”, said one official of Clinton Group at the beginning of 2016. Shares of Violin Memory are down 86% in the past 12 months. A total number of eight hedge funds from our system had stakes in the struggling company, amassing 10.40% of its outstanding common stock. George Hall’s Clinton Group owns 2.17 million shares of Violin Memory Inc. (NYSE:VMEM) as of December 31.

Disclosure: None