13D Filings? Four CEO Changes Two Months Out?

Key management changes get covered in the business press all the time. Whether a specific management change is a termination, unexpected resignation or retirement, an outside hire of a well-known business figure or an unexpected promotion, the human element behind a specific management change is often perceived as newsworthy. The real question that often gets ignored or fades into the background after an initial period of publicity is what possible significance the management change or management changes at a firm might mean to the short and/or long-term performance of the firm. Liberum Research's management change data and analysis is founded on the premise that "significant" management change/s can have a real impact on a company's performance.

More and more, activist investors (Carl Icahn, Relational Investors, Pirate Capital, Third Point and others) can often be found focusing their own efforts on pushing for specific management changes at companies they are heavily invested in. Activist investors are often advocates for specific management change/s. At times they contend that in the right circumstances, specific types of management changes can be key to a company's performance. We have already seen the impact they can have on companies both short and long-term. In essence, a 13D filing can in certain circumstances be viewed as a management change in and of itself. The easiest way to stay on top of activist investor intentions is to follow 13D SEC filings. ( An SEC rule requiring disclosure by anyone acquiring a beneficial ownership of 5% or more of any equity security registered with the SEC.) To get a real feel for the impact of management change, investors need to examine the details behind the change/s to determine what it might mean for the short and long-term.

Questions that could be explored include:

• Why did someone leave?
• If there is no succession plan in place, what does that mean for the company?
• Who has been hired or promoted?
• Do they fit in?
• What have they done before?
• Are they operational, marketing, and/or acquisition oriented?
• Are more management changes to come?
• Will they make a strategic change in direction?

These and many other questions need to be asked and answered.

Back in February, I picked 13 companies out of a total of 204 CEO changes in February investors might re-examine for possible investment consideration. Below are four from the list:

2/1 Crystallex International Corporation, (KRY - AMEX)

Mr. Gordon Thompson, was appointed President, CEO and Director of Crystallex International Corporation. Thompson replaces Mr. Todd Bruce as President, CEO and Director of Crystallex.

Thompson, who was a director of Crystallex from 2000 to 2002, has more than 30 years experience in the financial services sector including significant expertise in raising debt and equity in Canadian and US Capital Markets including Project Finance. More recently, Mr. Thompson served as Senior Vice President Corporate Development of NCE Resources Group/Sentry Select Capital Corp. He participated in the growth of the Oil and Gas assets from C$450 million in 2001 to over C$4 billion in 2006. In addition Mr. Thompson served as President of Strategic Energy Fund a private and public investment fund. While there, he oversaw the growth of that fund from $20 million to C$280 million over the last 4 years.

2/9 Eddie Bauer Holdings (EBHI - NASDAQ)

Eddie Bauer Holdings, Inc. announced the resignation of its President, CEO and Board member, Fabian Mansson. Howard Gross, a member of the Board, was named Interim CEO as the Board conducted a search for a permanent CEO. Gross has over 35 years of experience in the retail apparel industry, having served as President and CEO of Limited Stores and Victoria's Secret Stores, as well as CEO of the Hub Distributing, Millers Outposts, and Levi's Outlet Stores divisions of American Retail Group, Inc.

2/14 Solectron Corporation (SLR - NYSE)

President and CEO Michael R. Cannon resigned effective immediately, to join Dell in the newly created position of President, Global Operations. Solectron’s Chief Financial Officer Paul Tufano was named interim CEO while a global search was to be conducted.

2/26 Biomet (BMET - NASDAQ)

Jeffrey R. Binder was appointed President and Chief Executive Officer and a member of Biomet’s Board, replacing Daniel P. Hann, who had served as Interim President and Chief Executive Officer. Binder is a 15-year veteran of the orthopedic medical device industry, most recently in senior management roles at Abbott Laboratories.