Voce Capital Management LLC (“Voce”), which along with its nominees owns
5.2% of FBR & Co. (Nasdaq: FBRC)
(“FBR” or the “Company”) and is the Company’s third-largest shareholder,
today issued a new presentation to shareholders reiterating the case for
strategic change at FBR. The new presentation examines FBR’s strategic
choices and its likelihood of success without direct shareholder
involvement. The full text of Voce’s presentation can be found here.
Voce issued the following statement in connection with the issuing of
its latest shareholder presentation:
“FBR’s current management has demonstrated to us a dearth of sustained
focus through its serial ‘growth’ initiatives. Management has paraded a
constantly shifting set of priorities before the Company’s shareholders,
seemingly unbowed by the failure of most if not all of them to bear
fruit.1 Since current management took over in 2009, FBR
declared its intention to be a leader in debt capital markets, launching
high yield origination, credit trading and distressed restructuring;
announced its aspirations to be a player in healthcare and technology
investment banking; and dabbled in fund-of-hedge-fund principal
investing. In 2016, it appears to fancy SPACs and retail distribution.2
Its plans have often been underwritten through acquisitions and senior
hiring sprees. Yet none of this has rewarded shareholders with any
material success, by our analysis. We believe this is why FBR’s
shareholders have experienced negative returns (and significant market
underperformance) over this long period of time.
By our account, FBR has engaged in a rinse-and-repeat cycle of lofty
rhetoric and unfounded optimism; a reliance upon inconsistent and often
misleading disclosures by management to cloak its inability to meet
expectations, and deflect criticism therefrom; and a cavalier
willingness to deemphasize failed strategies and replace them with new
ones that appear to us to be no better reasoned or planned than their
Appreciating this backdrop is critical when assessing management’s
recent recognition that the ‘most important area for future growth at
FBR is within our advisory practice.’ We fully agree that advisory is a
top priority for FBR, as we have urged in every meeting we have had with
management, but given its history we have zero confidence that this
management team can succeed in this endeavor.4 Management has
touted advisory as a key goal since at least 2010, and perennially
assured shareholders it was experiencing ‘improvement,’ a ‘pickup’ and
‘momentum’ in advisory and told them to expect ‘significant growth in
that business.’ In reality, advisory revenues are 44% lower under
current management and have been flat, and disappointingly low, for
several years now. We think this failure betrays a lack of understanding
on the part of FBR’s management of what it takes to succeed in advisory,
and a further absence of credibility on its part to attract the caliber
of talent essential to succeed at this crucial task. Our slate of
nominees was specifically recruited with this deficit in mind.5”
Voce encourages shareholders to vote today on the BLUE
proxy card to help elect nominees Jarl Berntzen, Michael J.
McConnell and J. Daniel Plants at FBR’s June 14,
2016 Annual Meeting. In addition to their broad-based financial
and operating experience, professional pedigrees and public company
directorial acumen, all three of Voce’s nominees have investment banking
advisory experience, with Messrs. Berntzen and Plants having worked as
executives in the mergers and acquisitions group at Goldman Sachs (and
Mr. Plants also holding a similar role at JPMorgan Chase), as well as
having led advisory mandates later in their careers at smaller
investment banks that directly compete against FBR. As such, Voce
believes they bring the knowledge, credibility and relationships that
will be critical as FBR attempts to attract the talent essential to
building a leading advisory business.
Voce’s statement concluded: “Shareholders must act now to correct FBR’s
course and ensure that management’s misplaced strategic initiatives no
longer distract it from the task at hand: deepening its footprint in its
core industries, including and especially through the generation of
meaningful advisory revenues. Time is of the essence, since by our
analysis, creeping insider ownership (by virtue of massive equity
grants, rather than open-market purchases, along with corporate stock
repurchases with shareholder capital) is quickly closing the window on
shareholders’ ability to effect change at the Company.6”
About Voce Capital Management LLC
Voce Capital Management LLC is a fundamental value-oriented,
research-driven investment adviser founded in 2011 by J. Daniel Plants.
The San Francisco-based firm is 100% employee-owned.
Additional Information and Where to Find It
VOCE CATALYST PARTNERS LP, VOCE CAPITAL MANAGEMENT LLC, VOCE CAPITAL
LLC, JARL BERNTZEN, MICHAEL J. MCCONNELL AND J. DANIEL PLANTS (TOGETHER,
THE “PARTICIPANTS”) HAVE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE “SEC”) ON SCHEDULE 14A ON MAY 9, 2016 A DEFINITIVE PROXY
STATEMENT AND ACCOMPANYING FORM OF PROXY CARD TO BE USED IN CONNECTION
WITH THE PARTICIPANTS’ SOLICITATION OF PROXIES FROM THE SHAREHOLDERS OF
FBR & CO. (THE “COMPANY”) FOR USE AT THE COMPANY’S 2016 ANNUAL MEETING
OF SHAREHOLDERS (THE “PROXY SOLICITATION”).
ALL SHAREHOLDERS OF THE COMPANY ARE ADVISED TO READ THE DEFINITIVE PROXY
STATEMENT AND OTHER DOCUMENTS RELATED TO THE PROXY SOLICITATION WHEN
SUCH DOCUMENTS BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION, INCLUDING ADDITIONAL INFORMATION RELATED TO THE
PARTICIPANTS. THE DEFINITIVE PROXY STATEMENT AND THE ACCOMPANYING PROXY
CARD ARE AVAILABLE, ALONG WITH OTHER RELEVANT DOCUMENTS (WHEN THEY
BECOME AVAILABLE), AT NO CHARGE ON THE SEC’S WEBSITE AT http://www.sec.gov/.
INFORMATION ABOUT THE PARTICIPANTS AND A DESCRIPTION OF THEIR DIRECT AND
INDIRECT INTERESTS BY SECURITY HOLDINGS IS CONTAINED IN ANNEXES I AND II
TO THE DEFINITIVE PROXY STATEMENT FILED BY THE PARTICIPANTS WITH THE SEC
ON MAY 9, 2016. THIS DOCUMENT CAN BE OBTAINED AT NO CHARGE ON THE SEC’S
WEBSITE AT http://www.sec.gov/.
1 See Presentation page 43.
2 Page 70.
3 Pages 33-34; 45-46; and 56.
4 Pages 63-67.
5 Pages 9-11.
6 Pages 83-84.
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