NuCo2 Inc. (NDAQ:NUCO) shares rose $0.40, or 1.59%, to $25.63 after Shamrock Activist Value Fund disclosed a 5.66% stake in the company and recommended that it consider issuing a $7/share special dividend and institute a regular dividend of $0.25/share. The move caused a late-day rally that continued into after-hours pushing the stock price past $25.90.

Shamrock said that it believes the company's capital structure is sub-optimal and could support a substantial increase in long-term debt without compromising the company's ability to execute its business plan. Specifically, after considering a range of alternatives including, but not limited to, a further share repurchase, special dividend, and regular dividend, we recommend that the company utilize the strength of its balance sheet and strong cash flows to pay a dividend of $7.00 per share and institute an ongoing regular annual dividend of $0.25 per share. Achieving a debt financing package at attractive rates and terms should be achievable over the next 60 days."

In the end, the activist hedge fund feels that if the company believes it can achieve its business plan, they believe shareholders would be best off with a recapitalization of the company as proposed. Finally, Shamrock also requested a meeting with the board to discuss this proposal along with other measures that can be taken to unlock shareholder value. Combined, these factors make NUCO a stock worth watching!

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