LAPORTE, Ind., Nov. 16, 2009 (GLOBE NEWSWIRE) -- Timothy Stabosz, the largest individual shareholder of Cobra Electronics Corp. (Nasdaq:COBR), today announces the filing of Form 13D, to fulfill SEC disclosure requirements of 5% or greater ownership of publicly traded companies. In the filing, Stabosz, who describes himself as a traditional "Graham & Dodd" value investor, reports owning 5.8% of Cobra, and explains the purpose of his investment. The entire filing can be accessed at this web link:
http://www.sec.gov/Archives/edgar/data/30828/000116289309000006/cobr13d.txt
To summarize the filing, Stabosz believes that:
1) Cobra is undervalued, based on historical profitability, price/book ratio, overall brand value, and historical trading price of the common stock, among other reasons.
2) Recent earnings results have been poor, mainly due to the recession, but also due to large goodwill and deferred tax asset write-offs (one time events that do not affect cash).
3) Executive compensation is disconcertingly generous, executive common stock ownership is unacceptably low, and public company costs are a burden.
With this in mind, if management is unable to more adequately justify its existence, by achieving a double digit return on equity, and/or a return to a common stock trading level more commensurate with historical norms within 12-18 months, Stabosz believes the company should seek to maximize value for all shareholders and explore strategic alternatives, including a potential sale, breakup, or going private transaction. (Having Cobra absorbed by a larger entity would allow the elimination of significant SG&A and public company costs, which explains why a sale of the company could be the outcome that best maximizes shareholder value, in light of the decidedly mediocre return on investment current management has achieved over its decade long tenure.)
Stabosz stated, "Cobra is truly a great brand, and a wonderful company with a noteworthy history of innovation. Its PPL division, with its renowned 'Snooper' brand, is a premier player in the U.K. and Europe. While I believe that management has strategies in place that COULD result in significant improvement in operating results, and outsized returns to shareholders over the next few years, I also know that under current management, Cobra has been a marginal performer, at best, from a profitability perspective, and management must struggle mightily to justify its compensation level vs. the level of success attained. Furthermore, outright ownership of common stock by upper management is dismayingly low (9 directors and executive officers, as a group, own a mere 172,000 shares, or 2.6%), and reflects a distressing lack of alignment between management and shareholder interests. By comparison, my 5.8% position in the company is more than double the entire director/officer stake," Stabosz lamented.
"With all this in mind, one has to legitimately question whether an independent Cobra is in the best interests of its shareholder base. The jury is out; but this shareholder believes the time is nigh for tangible achievements, and measures of success, in the coming economic recovery...and sooner rather than later," Stabosz concluded.