I have written about Capital Southwest Corp (CSWC) before in this post:
Today, CSWC reported net assets at December 31, 2007 of $541,924,018, equivalent to $139.34 per share. This was down significantly from the $186.91 reported as of 3/31/07. This was due mostly to a drop in the value of shares that CSWC owns in Heelys (HLYS). CSWC filed to sell its shares about six months ago, but then the markets headed south and the company pulled it.
CSWC has an excellent long term track record of creating value for shareholders, but has stumbled a bit as the “overvaluation” of Heelys has contracted to a more reasonable level.
Also, a shareholder yesterday made a filing with the SEC demanding that CSWC make some changes at the company:
1) “We believe the Company should liquidate, in an expedited but orderly manner, the approximately $55 million of non-control interests in public securities that it owns. These positions can easily be liquidated before the Company’s fiscal year end of March 31, 2008. The cash proceeds from these sales should then promptly be distributed to shareholders in the form of a one-time special dividend.”
2) “The Company should hire a nationally-recognized investment banking firm to evaluate strategic options with regard to CSWC’s four major ownership stakes in public companies (WIRE, ALG, PHHM and HLYS.”
3) “We believe that the Company should hire an independent firm to opine on the valuation of some of its larger private company investments– such as Rectorseal/Whitmore, Lifemark, and Media Recovery.”
The investor has been trying to work privately behind the scenes with the management of CSWC, but has become frustrated with them.
The stock has barely moved on this news.
