Macrovision Corp.
(NDAQ:MVSN) shares moved up marginally after Blum Capital disclosed a 5
percent stake in the company last Friday, according to a Schedule 13D/A
filing with the SEC. Shareholders are hoping that the activist hedge
fund will work with management to unlock value in the company.
What
is in the cards for the software company? Well, Macrovision's balance
sheet is extremely solid with $413 million in cash with only $240
million in total debt. Often times, hedge funds will look to distribute
this spare cash to shareholders via a share buyback or special dividend.
The
problem is that Macrovision is showing negative year-over-year cash
flow growth of -80 percent with an EBITDA margin of 18.4 percent. This
has many speculating that Blum Capital will step in to reduce the
company's capital spending and distribute the spare cash to
shareholders via a share buyback or special dividend.
Whether or
not the hedge fund will be successful in implementing this strategy
remains to be seen; however, with a growing 5 percent stake in the
company they may have enough say to make it happen. Combined, these
factors make MVSN a stock
worth watching!
Related CompaniesMicrosoft Corp. (MSFT)RealNetworks Inc. (RNWK)Sun Microsoft (JAVA)