Jaguar continually monitors the market seeking investment opportunities that meet its criteria of undervalued and overlooked companies trading at a significant discount to cash resources. The rationale for seeking companies trading at a discount to their cash is that it provides downside protection for an investment. Jaguar is generally agnostic about the industries in which target companies operate, and has enjoyed past successes in a wide range of industries including mining, biotech, and technology.
Situations that attract the attention of Jaguar include where there is a mismanagement of company resources, redundant cash, and the company is undervalued by the market. Such situations present opportunities for investors such as Jaguar to present a new direction to shareholders. It is not uncommon for companies, particularly during periods of market volatility, to trade at a negative enterprise value. In such a situation, the market is effectively saying that it lacks faith in management’s ability to create value. This state of affairs presents an opportunity for an activist shareholder to pursue change and advocate for better uses of a firm’s cash.
Jaguar prides itself on holding companies with poor corporate governance to account. The hallmarks of such companies include Boards that lack sufficient expertise related to the industry in which the company operates, frequent non-arm’s length transactions disclosed in filings, excessive executive compensation and directors’ fees, and excessive change of control payments payable to management (i.e. a de facto poison pill).
After taking an initial toehold position, Jaguar prefers to first engage management and directors of target companies to see if they are amenable to taking actions to increase shareholder value. Dialogue with management and directors is an advisable first step, and it is important to impress upon them the fact that both sides have a mutual interest in increasing shareholder value. It is preferable to work from the point of view of aligned interest to foster cooperation and steer away from an adversarial relationship. If management fails to take the necessary steps to create shareholder value, Jaguar will explore alternative measures such as proxy campaigns and take-over bids.
With a track record of past successes, Jaguar looks forward to future opportunities to create shareholder value.