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No Klingon's are involved, and the spelling is different, but esteemed value investor Tommy Kahn of the Kahn Brothers is taking matters into his own hands at New York discount retailer Syms Corp.
Kahn, who's father Irving Kahn had previously served as a teaching aid to "father of value investing" Benjamin Graham, penned a letter he is sending to Syms president and CEO Marcy Syms explaining how he believes the Secaucus, N.J.-based company's board should hire a consultant to do a study. "What is the future for their discount model for retailing? Has the future changed or is their model still sound?" Kahn asked. "These are the questions that need to be asked." Kahn's efforts come after activist hedge fund managers at Barington Capital Group launched an activist campaign last year to affect share improvement at Syms. The activist's pressed the company to end its plan to deregister from the Securities and Exchange Commission and delist from the New York Stock Exchange. That effort was successful after Syms announced Tuesday that it would end its deregistration plan and list on Nasdaq stock exchange. Kahn and Barington agree that Syms should seriously consider getting an appraisal of its real estate, but Kahn said he thinks the bigger question is whether the company is viable as an independent entity or it should be part of a larger retail corporation. Kahn notes that should Syms decide to shut down the business, throw out the clothing and sell the real estate, it could receive something in "the neighborhood of the high teens to the 20s a share." Syms traded Friday afternoon at around $12 a share. Syms states that it had sought to deregister to avoid new costs, including those imposed by the Sarbanes-Oxley Act of 2002. The company said it could save $750,000. But investors following Syms contend that the real reason why management wants to deregister it is to lower the value of the stock price so that management, including store founder Sy Sims, 81, could complete a management-led buyout at an inexpensive valuation leaving shareholders with lost value. According to a regulatory filing, Syms disclosed that they have approximately 413 holders of record. "The notion that they want to delist to save $750,000 doesn't ring true," Kahn said. - Ron Orol See Dealscape: Hedge funds seek to block Syms deregistration Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World. Categories Deal Video
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