Twin Disc (NDAQ:TWIN) executives and board members may have to fight for their jobs after a large investor again criticized the power company's misleading statements and urged it to pursue a sale, according to a Schedule 13D/A filing with the SEC.

Clarus Capital, which owns 5.1 percent of the company, issued a letter to Twin Disc's board of directors criticizing the company's own initiatives to unlock value and pushing for it to hire an investment banker to explore a possible sale. In particular, the hedge fund is concerned with the fact that the company refuses to improve its balance sheet or privatize to reduce costs while board members and executives continue to sell shares.

"We are asking the Board to seek the advice of an investment bank regarding how to maximize shareholder value because of the continuing undervaluation of Twin's stock and because we believe there are parties who are interested in acquiring Twin at a significant premium to its current stock price," said fund manager Ephraim Fields in a letter to the board.

Some shareholders are questioning whether the company is really trying to maximize value. They suspect that the chief executive, who has already amassed significant personal wealth, may be more interested in keeping Twin as a family run business so that his son, who is currently an employee of the company and a board member, can one day run the company. Moreover, they question why the company remains public despite the lack of equity need and significant costs. Where do executive and board loyalties lie?

"With some of these Board directors continuing to reduce their already limited ownership of Twin stock, one might wonder whether these directors are truly motivated to make decisions that are in the best interests of all shareholders," said Fields. "As our 13D clearly indicated, over the past three months (which covers the period during which Twin has initiated its buybacks) Clarus has been buying, not selling, shares of Twin."

In the end, this appears to be another case of a family-run company that can't seem to accept the fact that they are legally bound to be accountable to shareholders. If Clarus Capital can successfully institute change and force a sale, significant value could be unlocked for shareholders. This makes TWIN a stock worth watching!

Related Companies
UQM Technologies Inc. (UQM)
Regal-Beloit Corporation (RBC)
Tecumseh Products Company (TECUA)