Arotech - Some Thoughts to Consider When Assessing a Potential Investment

I have a small position in Arotech http://www.arotech.com

It is was a speculative bet.  At the time of purchase my view was that the company had some assets of value; however, they were compromised by management. The share price declined, but I held on in the hope that the company would eventually see sunshine.

It appears that a deep-pocketed investor is proposing to shake things up.

Ephraim Fields of Echo Lake Capital today sent a letter announcing his intention to nominate an alternate slate of directors to the Board of Arotech Corporation ("ARTX" or the "Company") (NasdaqGM: ARTX). Mr. Fields is ARTX's largest single shareholder, owning 8.1% of the Company's shares (which includes shares underlying sold-short put options exercisable within 60 days hereof). The alternate slate seeks to replace three directors, including the current Executive Chairman and President/CEO. Mr. Fields believes that after years of shareholder value being destroyed, while insiders have personally benefitted from excessive compensation packages and questionable related party transactions, that changes at the Company are urgently needed.

The full text of the letter can be found here: http://www.baystreet.ca/viewarticle.aspx?id=434551

Field's letter is instructive.  How often have you considered some of the issues raised in his letter during your assessment of a potential investment?

It will be interesting to follow the course of this challenge.

As always, it is useful to conduct a Google search for the names of executives and other details about any company on one's list of prospective buys.

http://www1.salary.com/Steven-Esses-Salary-Bonus-Stock-Options-for-AROTECH-CORP.html - ouch ... and about that bonus

Dunkin Donuts - Esses' performance in Israel

http://finance.sun-sentinel.com/who-are-robert-s-ehrlichs-connections/artx/executive/robert-s-ehrlich/robert-s-ehrlich.htm

http://classactiondefense.jmbm.com/2009/04/pslra_class_action_defense_cas_22.html

I've experienced a turnaround previously when outsiders took control and shook up complacent management.  I made a profit.

For more information on active investing, you can access the following URL and daisy chain therefrom:
http://activistinvesting.blogspot.ca/search?updated-min=2015-01-01T00:00:00-05:00&updated-max=2016-01-01T00:00:00-05:00&max-results=37

This is also interesting:
Shareholder Activism on the Rise: How to Benefit
...When values are high, those that remain usually have some obstacle to their realization, typically management.