After holding a minor position in Eastern Co. (EML, Financial) for more than five years, Mario Gabelli (Trades, Portfolio) on Thursday more than doubled his stake in the company, according to GuruFocus Real Time Picks.
Gabelli’s new stake contains 264,858 shares, reflecting a 170.8% increase and 4.26% of the company’s outstanding shares. At the end of the fourth quarter, he had held 97,758 shares.
Eastern Co. is a hardware, security products and metal casings manufacturer whose shares advanced 14.5% year to date to close at $19.60 Thursday after a 0.61% decline.
The company is also currently engaged in a proxy fight with activist hedge fund Barington Capital Group, which holds 5.2% of its outstanding shares. Barington wants to secure seats for its own chief executive officer and one other member Eastern’s board, according to a Securities and Exchange Commission filing last month.
In a letter to Eastern Co. on Feb. 6, Barington criticized the company for rejecting an offer for a buyout by Synalloy (SYNL, Financial) within 12 days of receiving it, stating that it was not in the best interest of the company or sharheolders.
“Barington has been deeply disappointed by the performance of the Company,” a Feb. 23 letter from the hedge fund announcing its board candidates also said, “which has significantly underperformed its peers and the market as a whole over the past two, three, five and ten-year periods. After seeing no significant new initiatives being introduced at the Company that Barington believes are likely to meaningfully improve long-term shareholder value.”
On Feb. 11, Eastern Co. announced fourth quarter earnings of $2 million, or $0.33 per diluted share, up slightly from $1.9 million, or $0.31 per diluted share in the same quarter a year ago. Fourth quarter revenue was $34.4 million, versus $34.3 million in the corresponding period last year.
Eastern Co. has a $121.7 million market cap. In the past five years, it grew average annual revenue at a rate of 2.7%, EBITDA at 10.6% and 3.5%. The company’s P/E ratio is 16.3, its P/B ratio is 1.4 and its P/S ratio is 0.9, near a two-year high.
For more stock trades of Gurus in real time, visit GuruFocus’ Real Time Picks, a Premium Feature. Not a Premium Member of GuruFocus? Try it free for 7 days here.
