The once dazzling online retailer's shares hit an all-time low…
Do you remember, and you should because it was three months ago, the surprise SurfStitch v SurfStitch blood feud?
To quote that story,
Just a few hours ago, the CEO and co-founder, Justin Cameron, quit his gig “to join forces with a private equity group, in preparation for a possible bid for the company.”
Meanwhile, the other co-founder of SurfStitch, the brunette Lex Pedersen, has been left to rock to and fro in his cubicle! Blood feud?
In The Australian newspaper, Eli Greenblat reports: “Left stranded is Mr Cameron’s surfing buddy and fellow SurfStitch co-founder Lex Pedersen, who remains at the company as managing director in charge of its North American online business Swell.
“Surfers have been known to get into violent punch-ups over accusations of being burnt, or having another surfer drop in and steal their wave, now at SurfStitch it will be private equity raiders, lawyers and merchant bankers puffing out their chests and bracing for a rumble.”
Three months later, the once dazzling biz is still doin’ it tough, its shares hitting an all-time low of under thirty cents on Friday.
In today’s business news, and as reported by financial reporter Elizabeth Knight:
Surfing online retailer SurfStitch has comprehensively moved from being one of the up-and-coming Australian players to a corporate mystery.
A series of strange events began in early March when its (then) highly regarded chief executive Justin Cameron abandoned his job claiming he was teaming up with private equity to buy the company.
He seems to have since vanished, leaving shareholders to wonder if the private equity play was a hoax. Both Cameron and the would-be suitors now appear to be ghosts.
The board of SurfStitch is weighing its options as its share price remains depressed and the near-term earnings prospects look equally grim. On Friday morning, the share price fell to its all-time lows – briefly dipping more than 11 per cent to below 40¢ in morning trade.
After Cameron dropped his sensational departure bomb on the SurfStitch board via email in early March shareholders were left both confused at his unexpected decision and salivating at the prospect of a bid for their stock.
Three months later, no private equity player has stumped up with an offer – indeed, the company’s board hasn’t had even a whiff of an approach from a would-be suitor, rumoured to have been TSG Consumer Partners – and even more bizarrely the board has not heard from Cameron at all.
…and…
If the ignominy of the May 4 downgrade wasn’t enough, the company also received some unwanted attention from the stock exchange, which issued a query to the company about the fall in the share price and the spike in volume leading up to the earnings warning.
So what of Cameron? Some say he is somewhere in the US, others say that attempts by SurfStitch shareholders to contact him have garnered no response.
Stranger still was that he left $400,000 of options on the table when he walked out the door – after declaring to the chairman that he was “deeply conflicted”.
Former investment banker Cameron founded the company with the now chief executive Pedersen.
I think its the wave pool scheme–now that anyone can surf (Joe from Kentucky)-anywhere–maybe surfing has lost its cool factor. Who’s gonna want to buy surf threads–when Joe from Kentucky can surf–and can surf better than you–cause Joe has a wave pool to practice in….
Looks like the best time to buy
lol…another financial advice article. on 1/09/2015, Cameron sold 45% of his shareholdings for $13,778,563 at an average price of $1.78 each, many to FIL Limited. He paid at most 52 cents each for some of those shares (when he and his mates bought Billabong’s 51% shareholding). However, since Cameron was a seed shareholder in Surfstich, his average purchase price was probably around 28 cents per share. Therefore, when he sold his 7,740,765 shares in July 2015, he made a profit of around $11,611,148. Do you think he gives a damn about $400,000 in options (which I can’t find exist). Cameron wouldn’t give a hoot. Only a compete idiot would have invested in Surfstich, where its IPO Prospectus showed it hadn’t made a profit in recent years. Cameron probably laughed at these suckers all the way to the bank.
Insider trading rumours aside, if someone does pony up with a buyout offer, well lets just say ol captain birdseye is thinking about an ill advised flurry / gamble in online surf retail shares.
Share prices at an all-time low just months before the release of Sharkbanz game changer?… Buy! Buy! Buy! Buy!
come on. we need more rants and fun, not regurgitated business news. i will leave this here for inspiration, BG.
Get Brendan Bolton down to surf stitch HQ, he’ll sort em out!
Sharkbanz arrived too late! fuck.
lad had enough. he said ‘fuck this’ and has gone surfing.
This is getting really entertaining. To start with 2 guys actually convince people to invest in the selling of surf clothing in 20 fucking 14. That in itself is mind blowing. Now there’s going to be an investigation into insider trading? Get me a bucket of popcorn.
ASX & ASIC know whether or not Cameron was selling shares after his departure. That they made an inquiry to Surfstitch is interesting. The suspicious trading is said to have occurred in late April & Cameron left the company in early March (however Cameron could have been possibly also selling as soon as he departed). When Cameron left the company he was not a ‘substantial (5% or more) shareholder’. Therefore, he was not required to make any public ‘director’ or ‘substantial holder’ declarations to the market after he left. Regardless, Surfstitch had $18M in negative operating cash flow for 2015 and only had $2M in positive operating cash flow for 1st half 2016. Therefore, in 2015, they bought too much inventory they were unable to sell. Any alert investor should have read this in the public SRF financial reports. As soon as the 1st half 2016 report was released, it was a ‘sell’ because they had not made up the $18M cash flow shortfall, particuarly since 1st half 2016 includes the summer & Christmas period in Australia. Cameron will have a problem is if his ‘Private Equity’ reason for departing, which pumped up the share price, was pure B.S (i.e., if he was selling into B.S). However, I doubt it. Cameron already cleaned up with around $11M in profit. Why risk that? It is difficult to be that stupid. SRF was a dud of a company based on its historical financial results. That is why Billabong exited it.
If projections hold, Copa América will generate more revenue in one summer than the WSL since its takeover of the ASP (even if we take inflated figures at face value)…
Surfstitch Wavepool in Levi’s Stadium?!?!?!
WSL to purchase Surfstitch as its retail arm – to release new range of athlete rashies, any Outerknown discontinued lines, and tickets to all Slater wavepool funparks!!!