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Blum Wipes Out His PRGX Stake
Posted by: Dianne Tordillo (IP Logged)
Date: December 17, 2012 10:43AM
Investing Guru Richard Blum of Blum Capital Partners reported to eliminating 99.89 percent of his stake last week of audit services provider, PRGX Global Inc. (PRGX), according to GuruFocus Real Time Picks. The transaction left Blum with a current holding of 3,120 shares, compared to his 2.7 million shares in the end of the third quarter. Blum was the largest shareholder at the time, owning about 11 percent of the company.
Starting in 2009, Blum started making bold reductions to his PRGX stake. Around that time, the stock was trading about $3. It eventually climbed to its highest last September, around $8, as Blum continuously reduced the following years after his first reduction in the first quarter of 2009.
Year to date, PRGX has gained 7.29 percent in market value. This morning, its stock is up 2 percent, at the price of $6.43.
Based in Atlanta, Ga., PRGX is in the business of working with its clients to recover lost profits through its data mining capabilities, and ultimately help increase the company’s profits through its advising services. One of its staple achievements is Profit Recovery, a proprietary data management and analytics tool that enables a closer, faster audit that leads to a more optimized financial recovery.
For the past 12 months, PRGX’s revenue growth has been -2.7 percent, while its free cash flow growth is 33.7 percent, according to its 10-Year Financials. Its EBITDA growth for the last year is 33.7 percent.
In the company’s third quarter fiscal report, PRGX president and CEO, Romil Bahl, revealed the positive effects of Profit Discovery to its revenues and adjusted EBITDA. Bahl stated:
"Our bottom line continued to grow faster than the top line… We have delivered Adjusted EBITDA growth of 27% compared to the same quarter last year, highlighted by the reduction of cost of revenue from 65.9% to 62.3%. It's worth noting that our New Services segment of Healthcare Claims Recovery Audit and Profit Optimization services reduced absolute cost of revenue while delivering the 19% top line growth.”
In November, PRGX announced the commencement of its common stock public offering. The company offered more than 6.2 million shares of its common stock at $6.39 per share, to be sold by the company and its existing shareholders. A press release indicated that the company intends to use the net proceeds from the offering for “working capital and general corporate purposes, including potential acquisitions.”
The release also noted that the company will not receive any proceeds from the common stock sold by PRGX shareholders. The offering closed on Dec. 11, the same day that Blum reported shedding more than 2.7 million of his PRGX shares.
In a regulatory SEC Filing, an 8K Form announced the departure of Blum’s firm as a PRGX officer. The filing stated:
“Following the closing of the Company’s public offering, N. Colin Lind resigned from the board of directors of PRGX Global, Inc., effective December 12, 2012. Mr. Lind had been serving as the representative of Blum Capital Partners, L.P. (“Blum”) on the Board pursuant to Blum’s Investor Rights Agreement with the Company. As a result of the sale of shares by certain of its affiliates in the Company’s public offering, Blum is no longer a shareholder of the Company.”
The filing proceeded to provide further details of the public offering, stating: “The net proceeds to the Company of the public offering, after deducting underwriting discounts and commissions and estimated offering expenses, were approximately $14.6 million.”
PRGX is one out of the 14 stocks in Blum’s portfolio, worth a total value of $868 million. GuruFocus named Blum as having the best-performing stock picks in 2012. (Read How Richard Blum Had the Best-Performing Picks in the Past Year)
See Richard Blum’s portfolio here. Also check out the undervalued stocks, top growth companies and high yield stocks.
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Guru Discussed: Richard Blum: Current Portfolio, Stock Picks
Stocks Discussed: PRGX,