You might know Karen Finerman as a hedge fund manager or as the prettiest Fast Money trader. But did you know despite her conservative demeanor she’s sometimes a barbarian. No, not like that, we mean activist investor.
When a company is being mismanaged, she makes her voice heard by speaking with her money. In fact, she did exactly that two years ago with biotech firm Cyberonics . Despite the promise of a breakthrough, niche product -- a nerve stimulator to treat epilepsy -- the shares never really delivered.
Then, adding insult to injury, word surfaced that the CEO at the time was embroiled in an options backdating scandal. So with her 7% stake in hand, she launched a proxy fight: leveraging her rights as a shareholder to elect new board members which included partner Jeffrey Schwarz.
The most legendary activist on the street, Carl Icahn, saw the same value in Cyberonics and backed her board nominees. After a contentious few weeks, Cyberonics waved the white flag as she got the votes to overhaul the board.
Now, the new management team, led by former Boston Scientific executive Dan Moore, has the shares on the mend. The stock is up more than 60 percent this year. And earlier this month Cyberonic swung to a profit and they expect higher sales going into ’09.
Not too shabby. But we're Finerman fans to begin with. So, for further insights we invited the current Cyberonics CEO Daniel Moore to be our guest on the show. Here's a synopsis of his main points.
How were you able to return the company to profitability?
We did it two ways, explains Moore. First was with cost cutting. We took operating expenses down by $54 million. Second we grew our epilepsy business. Year over year it’s up 14%.
And what do you provide patients who suffer from epilepsy?
We make an implantable generator that’s put in the chest. It sends mild electrical impulses that impacts the brain, he explains.
Trader what do you think of the stock?
I still hold a large share of the company, reveals Karen Finerman.
I like to too, Pete Najarian exclaims.